Good Bye to Foreign Aid

NEW YORK, July, 2011 (IPS) - - Faced with a total public debt of $14.46 trillion, the United States is besieged by layoffs in police, fire stations, libraries, teachers and workers in all core services and professions in all State governments, Americans urge US Government to use the $126 billion a year it spends on wars in Iraq and Afghanistan for urgent domestic needs. Americans argue that there are so many better uses for the money, and say they are baffled the US government would build bridges in Baghdad and Kandahar and not in the United States.



Recently, President Barack Obama revealed that since 2001 the two wars have cost US taxpayers over $1 trillion, which is perhaps a gross underestimation. Still, the number is staggering. Many reputable American researchers (including Noble Laureate Joseph Stiglitz and researchers at Harvard and Brown Universities, and the Institute for Public Accuracy), conservatively estimate that the costs could be in the range of $3-4 trillion. Americans are now fed up with these wars and are getting more concerned about mounting U.S. indebtedness. At the same time, US allies in the wars in Iraq and Afghanistan are slowly winding down their military operations. 



The effects of wars, the 2008 financial crisis, the economic recession, housing foreclosures, rising commodity prices-- to name a few-- have brought the US economy to its knees. Since 2008, over 400,000 State jobs have vanished, bringing the US unemployment rate to 9.2 per cent. The economies of European countries now termed as "PIIGS" (Portugal, Italy, Ireland, Greece & Spain) are also in deep financial trouble. Even fast developing BRIC's (Brazil, Russia, India & China) are not impervious to the global economic crisis. The escalating political and military problems in Libya, Yemen, Bahrain, Syria and other countries add to the costs of war and human suffering. 



The rising gas and food prices, the negative effects of climate change affecting crops in developing countries, and the millions of refugees triggered mostly by ongoing conflicts, come with economic consequences of their own impacting on key development factors. While almost the whole world collapses, the need for emergency food aid is likely to rise in the next decade. 



Due to this unrelenting global financial crisis, it is natural that the multi billion dollars in development aid from the US and Western Europe to developing countries is in danger of being drastically curtailed. 



In 1970, the world's rich countries agreed to give 0.7% of their GNI (Gross National Income) as official development aid (ODA), annually. With the UN Millennium Development Goals, which include the reduction of poverty and hunger worldwide, rich donor nations pledged to spend 0.56% of GNI on poverty reduction by 2010, and 0.7% by 2015. Many credible studies prove that the intended target was never achieved.



The 1970, UNGA Resolution 2626 stated that "financial and technical assistance should be aimed exclusively at promoting the economic and social progress of developing countries and should not in any way be used by the developed countries to the detriment of the national sovereignty of recipient countries".



It is on record that developed countries provided largest amount (about $200 billion) of funds to developing countries in 2002. However, many credible studies prove that poor recipient nations have returned more wealth to donor nations. 



Referring specifically to this anomaly, former UN Secretary- General, Kofi Annan, said in October 2003 that "Funds should be moving from developed countries to developing countries, but these numbers tell us the opposite is happening.... Funds that should be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards the Millennium Development Goals, are, instead, being transferred abroad." The same is true when it comes to the United Nations. US certainly is the largest contributor to UN budget but according to UN statistics, the US has consistently held the number one spot in grabbing UN procurement contracts. In 2004, the United States took in 24 percent (316 million dollars) of all UN contracts, amounting to a total of 1.3 billion dollars. 



In 2005, the percentage was 20 percent (331 million dollars) out of total UN purchases of 1.6 billion dollars. One senior U.N. official said "On a cost-benefit ratio, the United States gets as much -- or even more -- than what it gives to the United Nations". This proves that the donors know how to get their money back.



Today, aid is given in the name of war on terrorism, war on drugs, and credits for foreign militaries to buy US weapons and equipment, as in the case of Israel, Egypt, Yemen and others who receive billions of dollars of aid. Foreign aid earmarked for AIDS & other health concerns, hunger prevention, education, and poverty eradication have remarkably dwindled.



Development aid has long been recognized as crucial to help poor developing nations grow out of poverty. History has proven that though billions of dollars poured into developing countries, the aid has been primarily designed to serve the strategic and economic interests of donor countries, and humanitarian and development aid never reached those who desperately needed it. In 1985, Secretary of State George Shultz stated flatly that "our foreign assistance programs are vital to the achievement of our foreign policy goals." 



Foreign aid with strings attached and foreign debt that is hard to pay back have only worsened the situation. The borrowed money will be never paid back because overpopulation, unemployment, poverty, depletion of resources, rampant corruption, income inequality and civil wars will never allow the governments to earn more than the money that is spent.



It is also an accepted fact that most of the well-intended foreign aid is looted by corrupt governments and their politicians to strengthen their own families and their tyrannical rule, and not to improve living conditions of all citizens.



Foreign development aid has significantly reduced over recent years and it cannot be expected to rise even if the wars ended. Many researchers believe that in this age of globalization, with gigantic advances in science and technology, it is still possible to resurrect the economies of developing countries but only if the Governments in power make an honest effort. The bottom line: Development of the poorest countries depends on leadership qualities and dedication of those in power.