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JUST OVER ONE PENNY GOES TO FOREIGN AID

 

President Trump has submitted a budget that dramatically reduces foreign aid by 30%. This is folly.  Here are the facts regarding US foreign aid:

·      The total 2016 US government budget was approximately $3.854 trillion (3,854 billion).

·      The 2016 expenditure on Social Security, Medicare and Medicaid was $1.865 trillion (1,865 billion). Therefore, (not counting other programs) at least forty-eight cents out of every dollar went to US citizens.

·      During 2016, the US gave approximately $42 billion in economic, military and security aid to foreign countries. This is just over one penny for every dollar spent.  According to a May 4, 2017 Washington Post article, the average American believes that 26 cents of every dollar goes for foreign aid.

·      Except for Israel, the US does not transfer cash to its foreign aid recipients.  The majority of US nonmilitary aid is administered by the United States Agency for International Development (USAID) through Washington DC and its offices at US embassies around the world.

·      Federal law mandates that foreign aid assistance (equipment & services) be purchased from US companies (Buy America) as much as possible.  Therefore, the foreign aid program creates substantial employment in the US.

According to The Economist magazine, the 2014 ranking of international donors as a percentage of their gross national product is as follows:

 

1.     Saudi Arabia                       1.80%

2.     United Arab Emirates         1.26%

3.     Sweden                               1.09%

4.     Norway                              1.00%

5.     Denmark                             0.86%

6.     United Kingdom                 0.70%

7.     Netherlands                        0.64%

8.     Finland                               0.59%

9.     Switzerland                         0.50%

10.  Belgian                               0.46%

11.  Turkey                                0.45%

12.  Germany                             0.42%

13.  France                                 0.37%

14.  Australia                             0.31%

15.  Canada                                0.24%

16.  United States                    0.19%

17.  Japan                                  0.19%

18.  Italy                                    0.19%

19.  Spain                                  0.13%

20.  South Korea                       0.13%

 

Successful implementation of foreign aid is notoriously difficult and newspapers are replete with stories about disastrous projects. Successful projects do not make for good press. Here are a few successful projects implemented with US money:

As part of the 1979 Camp David Accords, the US invested approximately $3.5 billion over 35 years in sewer projects for Cairo and other parts of Egypt.  The majority of this money went to US companies and US manufacturers.  The quality of life for the poorest of the poor was improved from raw sewage in the streets to clean and dry byways. Anecdotal evidence suggested that in Cairo during the 1990s, anti-government and Islamic fundamentalists influence died down in those communities that received new sewers.

In the late 1950s and early 1960s oral rehydration therapy (ORT) was largely researched and developed with US government money.  [ORT replaces the lost fluids and essential salts thus preventing or treating dehydration which reduces the danger of death from acute diarrhea, especially among young children.] At only 10 cents per treatment, ORT is estimated to currently save approximately 1 million young lives per year.

US government funded micro lending projects have brought thousands upon thousands of people out of abject poverty throughout Africa, Central America, Aisa and the Middle East.  From buying a simple sewing machine in Asia to purchasing cattle in Africa, the rates of default on these loans are often better than those of the banks in the host country.

Question:  What if…

·      …the US did not abandon Afghanistan after the Russians were defeated and, instead, implemented a robust foreign aid program emphasizing agriculture, education and small business development?

·      … the US did not cut off Pakistan’s foreign aid after it successfully tested a nuclear device and instead built schools, trained teachers and promoted the education of girls and economic development  in the tribal areas?

Answer: Those countries might be substantially different than they are today.

 

In his 2013 testimony before members of Congress at a National Security Advisory Council meeting, James Mattis, the current Secretary of Defense, succinctly described what happens if you cut the State Department and foreign aid budget:

“If you don’t fund the State Department fully, then I need to buy more ammunition ultimately.  I think it’s a cost-benefit ratio. The more that we put into the State Department’s diplomacy, hopefully the less we have to put into a military budget as we deal with the outcome of an apparent American withdrawal from the international scene.”

Using just over one penny for foreign aid for every dollar spent by the United States government, is already minuscule and should not be cut further.  To do so further erodes US influence and reduces the available tools to bring positive change to foreign countries that need our help.

 

Scott Nichols

CEO

Development Fraud Investigations

www.dfi4inv.com

239-672-3277