Sunday, February 27, 2005
Putting the "D" in "ODA"
Regular readers will already know that foreign aid is a favorite topic here at The Demarche- we have addressed the issue a number of times, here, here, here and here. Well my friends, it’s time for another go at it.
The Senate Republican Policy Committee released a memo titled “The Truth About U.S. Foreign Assistance” to very little fanfare earlier this week. Coming as it does so late in the game after a UN official made remarks about “stingy” aid it is little wonder that the report did not generate much buzz. A Google News search today returned only two hits: The Washington Times in Embassy Row and the online magazine The Hill. As far as I can tell only one group has come out in clear opposition to the report: Citizens for Global Democracy. Their major bone of contention is that the report includes military assistance as aid under developmental aid; they brand the report “not so much a complete falsehood as a scheming misrepresentation of the truth”. At the risk of this turning into a new-sisyphan length post here is the executive summary (although I recommend reading the whole piece):
Executive Summary
• The United States is the world’s largest donor of official development assistance (ODA).
• U.S. ODA disbursements increased from $10 billion in 2000 to $16 billion in 2003, and are estimated to have increased to $19 billion in 2004. This number does not include the $18 billion in supplemental funding already provided for reconstruction efforts in Iraq and Afghanistan.
• Since 1998, the pattern for the United States has been one of steadily higher annual real increases in ODA disbursements, while most non-U.S. donors trend downward during this same period.
• The United States is the single largest contributor to all of the major international development organizations, including the United Nations itself.
• In order to appreciate the enormity of American charity, one needs to look at the totality of public-, private-, and corporate-sector aid, including nongovernmental organizations and other forms of charity, which contribute nearly $34 billion per year in international assistance annually.
• In 2004, personal remittances, net private investment, and NGO grants, all of which are considered non-trade financial flows, totaled $48 billion, nearly three times the size of U.S. ODA.
• Other crucial components of U.S. non-ODA foreign aid include the hundreds of millions spent annually on providing U.S. military support and assistance during disaster recovery and humanitarian relief missions and the billions of dollars earned by developing nations that have preferential trade access to U.S. markets.
• Arguably, without the U.S. military serving as the world’s “UPS” to deliver humanitarian supplies and soldiers to assist in overseas disaster zones, the international community would be hard pressed to be able to respond as quickly as it has in the past.
• Private American citizens, through a variety of different venues, have donated nearly $700 million to the tsunami relief effort.
This report, for the first time that I have ever seen, clearly and cogently defines exactly what the United States gives to the world in foreign aid, and breaks it down into what is included and excluded when we talk about “official developmental assistance” (ODA). An excellent example of what is not usually included is military assistance, i.e. “the U.S. military serving as the world’s “UPS” to deliver humanitarian supplies and soldiers to assist in overseas disaster zones.” Such use of the military in the recent tsunami relief efforts alone totaled over a quarter of a billion dollars. Remittances, preferential access to U.S. markets and military support (different than military assistance) are other items traditionally excluded from ODA figures. This serves to drastically lower the "official" amount of aid we deliver, making the U.S. look relatively "stingy."
Of all the facts and figures in the report, though, this one is my favorite:
United Nations: In 2004, the U.S. contributed 22 percent of the U.N. budget or $362 million…Germany, France, and the United Kingdom combined spent $343 million or 21 percent.
You just have to love it.
So what are we to do with this report? While critics of U.S. foreign aid correctly point out that we are not meeting the Organization for Economic Cooperation and Development (OECD) standards that stipulate members should devote 0.7 of their gross domestic product (GDP) to development assistance (we currently spend about 0.24 percent of GDP on foreign aid), we are far in front of the world when it comes to real aid dollars. I have no problem increasing the amount of money we contribute to the world, for instance I can think of $362 million that can be rerouted immediately to ODA. Before we expand our aid programs, however, we must work to ensure that this aid is properly utilized. To date it seems that when it comes to ODA we have managed two of the three- official and assistance. It is time to focus on development.
The days of simply sending money out into the world must come to an end. The American people and the recipients of aid must see a quantifiable result. U.S. foreign aid can and should be used as both a carrot and a stick. We should be willing to assist our friends and those nations sincere in establishing and maintaining free and democratic societies, and withhold aid from those who are not. We should be prepared to measure the effects our dollars are having, and do so regularly. We need to face the fact that we will not always succeed, and will perhaps from time to time have to end aid projects that do not bear fruit. Careful attention will have to be paid to ensure that we are not creating dependency in the countries who receive our aid, but rather that we are helping them to help themselves by creating new markets and suppliers for the world economy.
I don’t have the answers as to how exactly we can do all of this- but I know those answers are out there. I also know that the current aid programs in place are largely ineffective- their continued existence and the growth in aid that we are so proud of is the clearest indicator that we are failing miserably. The goal of any aid program should not be to increase current aid spending from $1 billion to $5 billion, but the exact opposite. An effective aid program should put itself out of business, quickly and efficiently every time, leaving behind an organic form of self help.
The President’s Millennium Challenge Account is one good example of the type of reform that foreign aid needs. In the words of the President:
“We must tie greater aid to political and legal and economic reforms. And by insisting on reform, we do the work of compassion. The United States will lead by example. I have proposed a 50-percent increase in our core development assistance over the next three budget years. Eventually, this will mean a $5 billion annual increase over current levels.
These new funds will go into a new Millennium Challenge Account, devoted to projects in nations that govern justly, invest in their people, and encourage economic freedom.”
I salute the President for his efforts to help the people of the world, and to focus on assisting those who share our dream of a more just world. But I would like to remind the President, the Congress and the directors of the Millenium Challenge Account that each and every one of those billions of dollars was generated by an American worker, and to date many of us are less than pleased with the results we have seen from the spending of our hard earned money. Let's redefine our foreign aid goals and pursue them with all the might and focus we can generate.2/27/2005 11:07:00 AM posted by Dr. Demarche
The Senate Republican Policy Committee released a memo titled “The Truth About U.S. Foreign Assistance” to very little fanfare earlier this week. Coming as it does so late in the game after a UN official made remarks about “stingy” aid it is little wonder that the report did not generate much buzz. A Google News search today returned only two hits: The Washington Times in Embassy Row and the online magazine The Hill. As far as I can tell only one group has come out in clear opposition to the report: Citizens for Global Democracy. Their major bone of contention is that the report includes military assistance as aid under developmental aid; they brand the report “not so much a complete falsehood as a scheming misrepresentation of the truth”. At the risk of this turning into a new-sisyphan length post here is the executive summary (although I recommend reading the whole piece):
Executive Summary
• The United States is the world’s largest donor of official development assistance (ODA).
• U.S. ODA disbursements increased from $10 billion in 2000 to $16 billion in 2003, and are estimated to have increased to $19 billion in 2004. This number does not include the $18 billion in supplemental funding already provided for reconstruction efforts in Iraq and Afghanistan.
• Since 1998, the pattern for the United States has been one of steadily higher annual real increases in ODA disbursements, while most non-U.S. donors trend downward during this same period.
• The United States is the single largest contributor to all of the major international development organizations, including the United Nations itself.
• In order to appreciate the enormity of American charity, one needs to look at the totality of public-, private-, and corporate-sector aid, including nongovernmental organizations and other forms of charity, which contribute nearly $34 billion per year in international assistance annually.
• In 2004, personal remittances, net private investment, and NGO grants, all of which are considered non-trade financial flows, totaled $48 billion, nearly three times the size of U.S. ODA.
• Other crucial components of U.S. non-ODA foreign aid include the hundreds of millions spent annually on providing U.S. military support and assistance during disaster recovery and humanitarian relief missions and the billions of dollars earned by developing nations that have preferential trade access to U.S. markets.
• Arguably, without the U.S. military serving as the world’s “UPS” to deliver humanitarian supplies and soldiers to assist in overseas disaster zones, the international community would be hard pressed to be able to respond as quickly as it has in the past.
• Private American citizens, through a variety of different venues, have donated nearly $700 million to the tsunami relief effort.
This report, for the first time that I have ever seen, clearly and cogently defines exactly what the United States gives to the world in foreign aid, and breaks it down into what is included and excluded when we talk about “official developmental assistance” (ODA). An excellent example of what is not usually included is military assistance, i.e. “the U.S. military serving as the world’s “UPS” to deliver humanitarian supplies and soldiers to assist in overseas disaster zones.” Such use of the military in the recent tsunami relief efforts alone totaled over a quarter of a billion dollars. Remittances, preferential access to U.S. markets and military support (different than military assistance) are other items traditionally excluded from ODA figures. This serves to drastically lower the "official" amount of aid we deliver, making the U.S. look relatively "stingy."
Of all the facts and figures in the report, though, this one is my favorite:
United Nations: In 2004, the U.S. contributed 22 percent of the U.N. budget or $362 million…Germany, France, and the United Kingdom combined spent $343 million or 21 percent.
You just have to love it.
So what are we to do with this report? While critics of U.S. foreign aid correctly point out that we are not meeting the Organization for Economic Cooperation and Development (OECD) standards that stipulate members should devote 0.7 of their gross domestic product (GDP) to development assistance (we currently spend about 0.24 percent of GDP on foreign aid), we are far in front of the world when it comes to real aid dollars. I have no problem increasing the amount of money we contribute to the world, for instance I can think of $362 million that can be rerouted immediately to ODA. Before we expand our aid programs, however, we must work to ensure that this aid is properly utilized. To date it seems that when it comes to ODA we have managed two of the three- official and assistance. It is time to focus on development.
The days of simply sending money out into the world must come to an end. The American people and the recipients of aid must see a quantifiable result. U.S. foreign aid can and should be used as both a carrot and a stick. We should be willing to assist our friends and those nations sincere in establishing and maintaining free and democratic societies, and withhold aid from those who are not. We should be prepared to measure the effects our dollars are having, and do so regularly. We need to face the fact that we will not always succeed, and will perhaps from time to time have to end aid projects that do not bear fruit. Careful attention will have to be paid to ensure that we are not creating dependency in the countries who receive our aid, but rather that we are helping them to help themselves by creating new markets and suppliers for the world economy.
I don’t have the answers as to how exactly we can do all of this- but I know those answers are out there. I also know that the current aid programs in place are largely ineffective- their continued existence and the growth in aid that we are so proud of is the clearest indicator that we are failing miserably. The goal of any aid program should not be to increase current aid spending from $1 billion to $5 billion, but the exact opposite. An effective aid program should put itself out of business, quickly and efficiently every time, leaving behind an organic form of self help.
The President’s Millennium Challenge Account is one good example of the type of reform that foreign aid needs. In the words of the President:
“We must tie greater aid to political and legal and economic reforms. And by insisting on reform, we do the work of compassion. The United States will lead by example. I have proposed a 50-percent increase in our core development assistance over the next three budget years. Eventually, this will mean a $5 billion annual increase over current levels.
These new funds will go into a new Millennium Challenge Account, devoted to projects in nations that govern justly, invest in their people, and encourage economic freedom.”
I salute the President for his efforts to help the people of the world, and to focus on assisting those who share our dream of a more just world. But I would like to remind the President, the Congress and the directors of the Millenium Challenge Account that each and every one of those billions of dollars was generated by an American worker, and to date many of us are less than pleased with the results we have seen from the spending of our hard earned money. Let's redefine our foreign aid goals and pursue them with all the might and focus we can generate.
