Foreign Aid: Shifting Our Perception

06/01/2010 06:35 pm ET | Updated May 25, 2011

In the wake of a dismal global economy, and people disaffected with government generally, officials charged with national budgets are scratching their heads in search of cuts that can be used to demonstrate fiscal responsibility and limits on out-of-control spending. Giving money to foreign governments or foreign causes is an easy target and easy talking point. Normally, we would like to help the world's poor, but at the moment, we aren't feeling too rich ourselves. This is a sentiment currently ringing throughout Western economies that have pledged since World War II to provide assistance in the name of global well-being, which is meant to better the donors as well as the recipients. And it is not only creating debate in international policies, but in domestic politics as well.

The recent election in the U.K. was the subject of some focus with discussion over how the American-style televised debates changed the dynamics of the election. And similar to our own political front, the domestic issue of jobs, and deteriorating family finances took center stage. The question of what the government is doing to help its own people as opposed to what it's doing to help other governments help their people is being asked with insistence.

Alec Van Gelder writes in the Telegraph, "The manifestos of Labour, the Conservatives and the Liberal Democrats all commit the next Government to wasting taxpayers' money just so they can sound compassionate." In the Times Online, Bronwen Maddox starts with "Labour, the Tories and the Lib Dems have hitched themselves to a spending target for foreign aid that is outdated and makes no sense." And further states of the 0.7 percent target of national income to development, "No one dares to decry the target, for fear of seeming callous." Mr. Van Gelder expresses frustration at the U.K's native rock stars that have become world icons for saving the poor by saying "But the 0.7 per cent target makes no sense, except to rock stars and pressure groups." As we know, in domestic elections, it is not uncommon for a candidate's stance on a particular issue to be used against him or her. However, in the case of this election, the candidates' positions on development aid, the magic 0.7 percent, don't seem to vary greatly, and the ire is directed toward whomever continues to maintain the target in spite of the feelings of a domestic electorate.

Crossing the pond, and reviewing the state of our own federal budget, there is an attempt by the Senate Budget Committee Chairman to reduce the President's International Affairs request by $4 billion. It has met with criticism from the established development and aid communities. The U.S. faces critical domestic issues and foreign assistance is an easy target when demonstrating areas of the budget to be cut. If, in addition to our domestic problems, there is a sentiment that our foreign assistance is ineffective and there is no accounting for it, then it becomes even easier to justify cutting aid dollars, in spite of the fact that foreign aid accounts for barely one percent of the budget. It is therefore now, more critical than ever, to devise more effective ways to measure and account for aid. Targeted, effective foreign assistance could counter some of the backlash that aid is receiving in the broader public. If there is a serious demonstration that the less than one percent of the budget that goes toward aid is actually making a significant difference on the humanitarian as well as strategic front, then there will be reason for the general public to view it differently. There should be efforts to develop an accurate system of measurement for progress made, or not made, by foreign assistance dollars. Metrics can be used to design more effective means of giving aid. For instance, after initial grants, aid recipients can be required to meet milestones before the next tranche of aid is given. A specified percentage of every aid package can be allocated for long term training and capacity building so that the evaluations are done on a collaborative basis with recipient governments. If the desired indicators are not moving in the right direction, then donor governments, international organizations and civil society can work together to find out why and move things in the right direction.

This discussion is not new -- it's been several years now that the merits of aid, what type of aid, or if aid at all is the solution. What is different now is partly a function of time. If we had been pumping aid dollars into the same regions for 5 years, or 10 years, one could argue that benefits remain to be seen. However, the original Foreign Assistance Act dates back to 1961 -- next year will mark its 50th anniversary. We now have enough years of data to draw definite conclusions. Opinions out there range from best case, there has been "some" benefit and progress is continually being made, to worst case, aid is actually the culprit behind the worsened condition of certainly sub-Saharan Africa. It is hard to argue that we are even close to solving the problem. So where does this leave us? In countries like Brazil, India and China, it is the private sector that is growing the middle class. Aid plays a role, perhaps even a large role; however it has not defined their development. The private sector has created jobs so that a middle class has been able to emerge and grow, slowly reducing the number of people living below poverty thresholds and creating rates of economic growth that have prompted backlash from the Western world. Effective aid strategies can create sustainable private sectors and infrastructure that will enable struggling aid-recipient nations to move forward more rapidly.

An integral component of our foreign aid will always be the strategic interest of the U.S. This is reflected in decades of aid appropriations to various countries. It would be unfeasible to advocate that aid should be divorced from strategic goals entirely. However, now more than ever, our security interests can be tied directly to the human condition. Improving human services can therefore contribute directly to our strategic goals as well.

To truly realize the goals of development aid, we need a change in mindset--shifting our perception of countries in need as being in need of blanket charity to being in need of partners in the growth. We should see as many public campaigns touting investment in sub-Saharan Africa as we do calling for more money. In some cases, more money is the right answer, and in other cases it is not. Greater attention should be paid to this distinction. In the cases where grants of aid are sent, there is often no system of accountability in place to ascertain that the money is being spent as intended for the purposes intended. We need milestones, metrics, measures of success, and we need to use these to shape the type and quantity of aid. Measurement should not be a difficult hurdle to cross. The U.S. Department of State puts out an annual report that measures human rights in individual countries, which generates a great deal of criticism globally. Embassy officers at posts around the world are taught how to gather information and incorporate it into this report. Similarly generated reports on areas such as health care, education and economic development might enable us to target our aid more effectively, and provide some measure of progress.

Our assistance should go to help train, help build capacity, identify the most pressing problems, and put in place sustainable solutions. Capacity building and private sector incentives command only a small role in global economic policy efforts. There are programs like Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE), and the African Growth and Opportunity Act (AGOA) which provide duty-free access for certain products and vital training resources for those seeking to utilize their benefits. But these efforts rarely gather the same attention as direct-giving. Increased focus on private sector development, trade preferences, direct investment and serious focus on measurement and accountability will take us toward a middle ground that moves us forward rather than lagging in debate. It is critical that we institute these things beyond just an academic perspective, into all of our aid flows.

Our foreign aid priorities have shifted over the years, with two major points of adjustment occurring, first in 1991 after the collapse of the Soviet Union and next in 2001 after the terrorist attacks of September 11. Next year, 2011, marks several anniversaries: 20 years after the final disillusion of the Soviet Union, 10 years since the terrorist attacks on the World Trade Center and 50 years since the enactment of the original Foreign Assistance Act of 1961. These timelines should serve as a marker for a serious evaluation of our foreign aid policies, what goals they have achieved so far, what goals we hope for them to achieve in the future, and most importantly, how we can shape them in a manner most likely to achieve these goals.