The Roles of Aid in Politics Putting China in Perspective

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Guess, George M. (1986), “The Political Economy of US Foreign Aid: Past and Present,” in Guess, George, The Politics of United States Foreign Aid, pp. 1-51, UK and Australia: Croom Helm Ltd.

As the US struggles for influence in the world power arena, its foreign assistance program follows along as a willing and important appendage. In a precarious context, characterized increasingly by desperation policy response to coups, counter-coups, terrorism and religious fanaticism, the lines between US foreign policy, foreign aid and trade activities become blurred. That foreign aid lacks autonomy among American public policies is harmful in several ways to US interests abroad and to the needs of the developing world. First, foreign aid may be erroneously credited for foreign policy power successes though development projects fail and underdevelopment may be increasing. Second, and more commonly, foreign aid is unjustly blamed for foreign policy failures. The rantings of a Khadafy are viewed by many as another failed foreign aid attempt, the cut-off of which penalizes the Libyan people and not their officialdom. Consistent with this, some believe that foreign aid is not criticized enough. “Who could be against aid to the less fortunate?” ask Bauer and Yamey (Thompson, 1983: 119). “When aid advocates talk of the disappointing record of aid, they mean not that aid has been ineffective or damaging but that the amounts of aid have been insufficient.”

Foreign aid consists of five programs: (1) Economic Support Fund (ESF), (2) Development Assistance (DA), (3) Food Aid or PL 480, (4) Security Assistance, and (5) multilateral Development Banks. These interrelated programs have separate constituencies and are proposed for funding by bureaucratic actors that are, in turn, controlled for efficiency and effectiveness by Congress working in conjunction with them. But these “checks and balances” have produced paralysis instead of health competition. Task definition is imprecise and institutional distrust among key actors tend to inhibit the proper functioning of checks and balances.

Further, that US foreign aid is a “microprogram” evaluated as a “macropolicy” creates false expectation and the likelihood of unfair judgment. Over the five major phases of foreign aid, the programs have been billed as dramatic macropolicies: spreading democracy, containing communism, and getting the poor ready for developmental “take off”. Tangled up with foreign policy events and the personal agendas of congressional “experts” and high-level amateur appointees in USAID, it can be stated without great risk that the bulk of foreign aid programs have been largely “unsuccessful” (or successful in a trivial sense). Perhaps the most successful program was also the shortest and most uncomplicated: the Marshall Plan. But since that program, the goals of foreign aid have broadened in almost inverse proportion to useful knowledge on the causes of poverty and underdevelopment. As the “fall guy” of foreign policy, the foreign aid program has been blamed by the left for neo-imperialism and by the right for generating exaggerated expectations among the poor which destabilizes political systems.

Foreign aid is a product of the American political system, a highly bureaucratized network of actors that clash over resources and the authority (or turf) to influence policy. To the extent that we can analyze foreign aid through the Bureaucratic Politics lens, we may be able to point the way to a more autonomous policy that will be more likely to achieve realistic objectives. This book seeks to describe the evaluative dilemma of US foreign aid as part of foreign policy and to explain how and why the program is often ill-designed and poorly executed. The goal is constructive: to enhance the capacity of foreign aid to benefit the Third World which indirectly can enhance US influence in world affairs.

The making and execution of foreign aid policy has been characterized by intense confusion over both objectives and evaluative criteria since its initiation in the early 1940s. Foreign aid is not really “foreign” policy or a “domestic” program; yet it is planned, executed and evaluated as if it were both. Hence, despite its marginal budgetary expense in US terms, it is nearly always a controversial policy (Montgomery, 1986: 94) In [sic] FY 1985, the Presidential foreign aid request amounted to less than 2% of the budget ($15.2 billion out of $925 billion or 1.6%). In FY 1978, US aid amounted to only 0.23% of GNP or about the same level provided by Austria, Japan, Switzerland, or Germany (Congressional Budget Office, 1980: 9). Nevertheless, Congressional Quarterly (1985: 2688) suggests that foreign aid “one of the most unpopular issues that Congress faces each year.”

Many have written of US foreign aid; many have written it off. But few have provided other than general frameworks for analysis. Critics of foreign aid tend to provide the more rigorous policy-oriented frameworks. Still, they tend to be simplistic, ignoring the real world of interest-driven bureaucratic policy-making which constrains both the US and its recipient countries. It is suggested that a Bureaucratic Politics model emphasizing “role conflict”, largely over budgetary resources, can be useful in explaining past failures and successes as well as providing a more solid foundation for foreign aid reform.

Guess, George M. (1986), “US Aid to Latin America,” in Guess, George, The Politics of United States Foreign Aid, pp. 133-178, UK and Australia: Croom Helm Ltd.

In sum, aid to Latin America is the product of a process that rigidly examines the scope of the program according to criteria that favor security of “hard” solutions in crisis contexts. The bulk of countries are not examined regularly by the process as a whole in other than superficial terms. Reacting to individual country crises or events, Congress proceeds to expand the list of statutory requirements to which AID must conform. This satisfies constituents on high-visibility issues such as El Salvador and Haiti. But it tends to inhibit communication between executive policy-makers and Congress. Congress thus weakens its own role and diminishes the value of foreign aid by refusing to treat economic aid as the primary means to development, rather than as diplomatic leverage. In Latin America, the lack of policy continuity, indicated by repeated and sudden injections of non-developmental aid via supplemental appropriations, is largely the result of superficial conflict between rule-bound executive and a Congress which retaliates with more rules to keep ostensible control of foreign aid. It cannot be said that more thorough debate of foreign aid funding to each Latin American country by both the executive and Congress, beginning in 1944, would have eliminated all developmental obstacles and produced functioning political democracies in 1944, would have eliminated all developmental obstacles and produced functioning political democracies in each case. But it would have helped!

Guess, George M. (1986), “US Aid to Asia,” in Guess, George, The Politics of United States Foreign Aid, pp. 179-221, UK and Australia: Croom Helm Ltd.

Realistic conflict in the Philippine aid case increased mutual consensus by US actors, eventually including President Regan himself, that Marcos should fall. According to Apple (New York Times, February 26, 1986) “Never before had the US pushed so publicly for the removal of a leader of major ally.” Though he notes that Washington eventually conspired to secretly end the regimes of Rhee in South Korea, the Shah of Iran, Duvallier in Haiti, Somoza in Nicaragua, and Diem of Vietnam, the Philippine case was different because a middle class alternative existed (and still does if Aquino falls) to Marcos.

The 1986 Philippine aid case suggests that where the roles are clarified by lengthy institutional conflict, communication and trust improve which increases consensus for foreign aid policy-making. Future US provision of aid to the Aquino and subsequent Filipino governments will occur in an improved “ecology” of policy-making. US aid to Asia should gain in improved chances of producing more actual security and development. Foreign aid economic “success stories” where political structure have not conformed to US “liberal premises” are now on notice that the US may well support reformist but not revolutionary alternatives. South Korean President Chun had the Kim opponents jailed for attempting to petition South Korean voters for a presidential election. Recently, after the demise of Marcos, he had the Kims released. The “second Japan” may find that the road to Tokyo does not pass through Manila (New York Times, February 26, 1986).

In the Philippines, to contrast with earlier US aid to Vietnam, “genuine cooperation” and “continuity of purpose” (Montgomery, 1962: 104) were attained by bureaucratic role conflict. The lesson, of course, is that US institutions should be receptive to the same realistic debate on all recipients before crises occur. As indicated by institutional behavior in Iran and Nicaragua, the US ignores most crises until they are irreversible. Where no political necessity exists for a hard look before a hard choice, foreign aid institutions maximize their respective turfs, Congress votes authorizations and appropriations on a superficial uninformed basis, and foreign aid continues its course despite evidence of major shortcomings.

Guess, George M. (1986), “US Aid to the Middle East,” in Guess, George, The Politics of United States Foreign Aid, pp. 222-255, UK and Australia: Croom Helm Ltd.

In sum, successful technical assistance projects, food aid, balance of payment support, and trade depends not merely on the “terms of trade” (bases for aid) or more US knowledge and sensitivity to local cultures. The ultimate effectiveness of aid to achieve security, profitability, and development objectives in this region depends on mutual agreement and trust. This mutuality is established not by laws and regulations or obedience to US bureaucratic routines, but rather from intense and realistic sparring about the issues over time. For this reason, Egyptian-US relations have evolved to an all-time high, and have been since Kissing-Sadat trust was achieved in 1974 following the Syrian-Israeli disengagement accord (Burns, 1985: 181). Nasser and his successors have been sparring with the US over food aid, military aid, refugee issues and the scope and purpose of economic aid projects for over 30 years. By contrast, aid to Israel has been based less on realistic conflict than its “special relationship” with the US and historical sympathy for the Jewish plight. This means that aid provides only marginal leverage and, of course, is not programmed or executed in the traditional sense by AID. The US has even less-realistic relationships with the rest of the Middle East, in part because of its Israeli client. This has assured that regional aid policy is the result of intense political rivalries and bureaucratic in-fighting. Intense conflict can lead to improved role definition, trust and better results (as in Egypt) or maintenance of the status quo (and more Irans).

Guess, George M. (1986), “Conclusion,” in Guess, George, The Politics of United States Foreign Aid, pp. 256-272, UK and Australia: Croom Helm Ltd.


In this final chapter we summarize what has been said so far, review the major problems with foreign aid policy as revealed through the BRC [Bureaucratic Role Conflict] model, and make recommendations for improving both the process and results. Foreign aid is planned and funded like most US domestic policies but it is unique in that it has both a domestic and international component. Since foreign aid (military, food, development) is the most tangible vehicle of US foreign policy, it receives the most blame (as a perennially unpopular congressional issue) but little of the praise because its results lack visibility and attribution. Lacking a political base of its own (most of its clients are abroad; powerful domestic clients of its subproducts distort results), foreign aid has been moved along by conflicting pressures from all directions, mostly in response to some actor’s (DOD, State, Presidency, Congress) perception of military threats or developmental need. Decisions have not generally been informed by realistic field assessments, largely because the institutions making foreign aid policy are primarily interested in other issues (DOD – defense; Congress – domestic policy; USDA – US agriculture, etc.). Foreign aid becomes an unstable byproduct of other policies.

Nearly 35 years ago, political theorist Verne Lewis (cited in Lyden and Miller, 1982: 264) was hopeful that improving the objectivity of budgetary analysis would permit decision-makers to compare relative effectiveness of economic and military aid programs to the achievement of “national security”. In the context of intense budgetary politicking by all foreign aid actors, several attempts along the “rationality” front were made. AID introduced PPBS in the early 1970s. The language and routines of program budgeting still permeate AID decision-making, contributing to better understanding of input-output relationships and permitting more incisive inquiries. At a higher level of aggregation, State Department developed the Integrated Foreign Aid Budget Request that included the SAPWRG process which coordinated the development of requests for all foreign aid programs.

But State Department sets most of the funding ceilings and program proportions in advance. Consensus and trust may have increased among foreign aid actors, but results may not have improved because communication and conflict is still unrealistic – the product of “frozen pluralism” and immense power differentials among actors. The foreign aid budget is made, then, in true ‘incremental” fashion by mixed role actors that jockey for marginal gains while “guardians” examine the controversial aid issues only, and “advocates” rely on Presidential, DOD and Congressional support for budget authority. But, given the mixed role conflict, the process tends to exclude the value of implementation efficiency and effectiveness. Such problems can be best resolved by structural adjustments from Congress to give USAID greater input and control over results.

Summary and Conclusion

From World War II to the present, the cluster of programs called foreign aid have moved all over the board, emphasizing profitability, welfare, and security objectives at different times and places almost without pattern. Since the path by which aid can lead to “development” is debatably, objective assessment of the results of foreign aid over its 5 evolutionary historical phases has been difficult. The first phase of US aid, Postwar Relief, was unusual in that a fiscally conservative Congress (fearing gold drainage) multilateralized US aid funding which financed predominantly humanitarian assistance to Europe. Aid policy was defined by Allied needs to rebuild war-torn economies on which massive political support and consensus existed in the US. Only on contemporary defense aid to Israel has the popularity of a foreign aid issue ever peaked this high with Congress and the US public.

From 1949-1960, foreign aid was primarily the vehicle for establishing military alliances against the Soviets. The twin incentives of military (stick) and economic (carrot) aid were used to “contain” the Soviets along “frontiers” established largely in the minds of several US presidents. Given the palpable failure of this simplistic security approach to developing capitalist countries and building true military-trade alliances, the third phase (1961-72) stressed exportation of US liberal political ideas via the Alliance for Progress. The ambivalent application of liberal principles where revolutionary changes actually occurred resulted in return to more traditional uses of aid as a cold war leverage instrument. By 1973, the Alliance and prior cold war aid had been lumped together as the traditional model – top down, capital intensive, with benefits “trickling down” to the poor. The 1973 New Directions effort of the 4th phase stressed “bottom up” development via aid programmed to the poor in smaller projects, executed often beyond the reach of large donor or recipient bureaucracies in PVOs. Given the fact that crisis-driven foreign policies governed the overall uses of foreign aid (evident in State Department budgetary ceilings) in both traditional and New Directions periods, the comparative results of specific aid expenditures have been difficult to isolate and attribute to aid policies. The contemporary Reagan era rhetorically stresses the private sector and PVOs, and views government as a constraint on economic development (capitalist) in the Third World. In practice, aid is still programmed by crisis to countries and regions. Though ESF and MAP expenditures remain large, DA projects seem to be decreasing in size and focusing more on the profitability and entrepreneurship of both private and public sectors than before.

Though profound disagreement exists on the results of even a single aid project, it was suggested that general results could be lumped into three categories: (1) recipient dependency, (2) technocratic and complex products transferred and (3) multiple unexpected consequences. Occasionally aid has not produced recipient dependency but rather, interdependence; nor complexity but rather, appropriate scale “user friendly” projects, and fewer unintended or unexpected results. On the other hand, dependency, complexity and unexpected results have occasionally been positive and led to growth and development! A major purpose of this book was to explain some of these field differences by stressing US policy-making as the major determinant.

In Guatemala, for instance, US military aid reinforced US ties to unelected military regimes which depended largely on military aid for their legitimacy and continued existence. Further, despite enormous amounts of DA to Nicaragua, an unintended consequence was that the landless rural labor force was 100% higher in 1977 than in 1950. The red tape and complexity of US aid, requiring full recipient understanding of the US budget process, often produces capital intensive glamor [sic] projects that fragment the local bureaucracies into state enterprises and autonomous institutions. This creates a public sector coordination problem for recipients as US-financed projects push ahead in isolated sectors. Nevertheless, aid to Costa Rica, Brazil and Colombia produced many more successes and fewer instances of dependency, complexity or unintended consequences. Aid to Haiti even produced the leverage that led to Duvalier’s demise! In Asia, aid produced dependency and little leverage in Vietnam. But aid to Taiwan and South Korea was quite successful in contributing to economic growth. Aid to the Philippines contributed to Marcos’ downfall as well. In the Middle East, US aid often “delegitimized” regimes in India, Egypt, and Turkey, making it hard for them to govern. The US sought dramatic and complex projects like the Aswan High dam, and through aid, sought to spread the effects of US-Israeli interdependence around other states like Saudi Arabia, Jordan, and Egypt with success in the latter case only. US food aid provided leverage and nutritional well-being in Egypt and encouraged Egyptian concessions to Israel, contributing to the peace necessary for foreign aid to achieve any kind of success.

The BRC model (Figure 3.1) was proffered as a conceptual vehicle by which more precise explanations of these aid results might be advanced. The model suggests that certain goal combinations drive aid in contradictory directions. Aid programs are translated into policy by (1) legislative and bureaucratic rules and repertoires which constrain action, and (2) role conflict among institutional actors of widespread differences in power. The efficacy of security, profitability, or developmental aid goals depends upon the utility of the operational rules and the degree of rival trust that exists between actors. Unfortunately, the rules have been accumulated according to specific congressional concerns over time (human rights, AIPAC interests), contributing to an almost permanent power imbalance where the level of distrust among actors is higher than ever (US versus Latin America on trade protection and debt repayment; Congress versus President over G-R-H; authorizations versus appropriations committees where the latter now makes legislation; and Congressional earmarks versus USAID needs on the use of aid funds).

Foreign aid actor conflict over these kinds of issues can evolve into realistic conflict and rival trust, with more positive aid results. Conflict tends to be incremental, which is useful in avoiding big errors and assuring continued communication, but costly in excluding key values such as implementation. Where properly managed for long-term political considerations, aid can facilitate rival trust and contribute to development. Though more precise research is needed on the interaction of these variables in comparative project perspective, application of the BRC perspective to Latin American, Asian and Middle Eastern instances suggested general verification of the variables and provided a broad explanation of differences between success and failure.

Based on the BRC model, conclusions can be reached and recommendations proffered for (1) achieving better aid results, (2) clarifying goals appropriate to differing country problems, (3) modifying internal and external operating rules, and (4) improving the relationship between institutional actors and policy results. For example, from the regional aid reviews several propositions can be formulated on the results of economic and military aid. First, we have seen that military aid can be a two-edged sword, increasing or decreasing US leverage and recipient regime legitimacy. Pouring military aid into personalistic and authoritarian regimes such as Haiti and the Philippines for vague and doctrinaire security objectives, will provide carte blanche for misappropriation of funds with much greater political than financial (unprofitability) costs to the US. Though increasing military aid to a greater percentage of the local budget, and to the mythical “center” of the military should bring leverage, where consensus between US actors and recipient political/economic objectives is initially lacking or unclear, the aid becomes a “sunk cost”, useful to the recipient and regime critics as a counter-control device against US pressures. For instance, decades of military aid to Somoza for stability purposes, ignored the need to develop effective opposition to his regime. Failure to direct aid beyond the ruling family or junta creates a political vacuum that is always filled by extremists of the left and/or right.

Further, “aid” to Duvalier increased his repressive capability. Though many of the DA projects were extremely successful by narrow technical criteria, the aid lesson from Haiti is that authoritarian regimes negate these successes. In Haiti, no amount of successful DA projects could compensate for the terror and overt corruption of the regime which locals perceived correctly to be US-financed. Here, the US paid twice for Haitian aid – once for DA projects, then for political refugees in Miami! Conversely, military aid for specific purposes, such as stabilizing a coalition, on which the recipients can at least agree to disagree clearly and rationally, can stabilize a political system and prevent extremist sniping and blackmail at centrist programs. A lesson of aid to El Salvador seems to be that properly targeted and monitored, military aid can be effective in achieving “soft” objectives, despite decades of civil war. Additionally, despite accounting norms, net political results can be positive even if gross aid exceeds local financial and institutional absorptive capacity and produces waste and more corruption. The key seems to be prior mutual consensus among US actors, and between the US and recipient on goals and implementation.

Second, results can be improved by redefining the role of foreign aid in the foreign policy process. Though total foreign aid amounts to less than 2% of the annual US federal budget, its consequences are far greater for US “national security” and global trade objectives. If a few billion dollars in PL 480 and ESF aid to Egypt and Israel can contribute to holding the Middle East together, this keeps the oil flowing and prevents inflation, unemployment and political unrest in the US as well. However, aid policy-making inputs are distorted and tend to interfere with its real responsibilities around the world. While the congressional foreign aid authorization process may be enhanced by new leadership, e.g. Fascell and Lugar on the respective committees, other congressional oddities such as G-R-H remove policy-making power from Congress and shift more of it to the President where foreign policy power already existed. This increases the disjointed tendency of the foreign aid program to move ahead according to the politics of supplemental appropriations, earmarks and continuing resolutions, all of which de-emphasize debate and analysis. These practices inhibit the development of rival trust among the relevant US institutions which could improve foreign aid results. Such newsworthy issues as “aid” to the Contras absorb hours of debate, despite the fact this had little to do with foreign aid. Rather, it is an issue of war powers, with management and funding by DOD and CIA, distribution only by USAID. Nevertheless, the public confuses Reagan hyperbole on aid to the Contras (like the French resistance; conflict only 2 days drive from Texas border, etc.) with foreign aid generally. The foreign aid process should be able to defend itself against being used for such transparent purposes. US aid was discredited for a time by the Mitrione affair in Uruguay in the late 1960s, where a CIA operative used USAID cover. The foreign aid policy process should be able to debate the issue squarely before funding and responsibility follow. Where were the “freedom-loving” Contras during Somoza’s reign? How did these exiles, many of whom were officers in Somoza’s National Guard, support the Chamorro opposition then? Since they were clearly co-opted and did nothing to aid freedom then, why support them now in the cause of creating yet another regime in Nicaragua? Such issues need to be debated by foreign aid actors if funds are to be termed “aid”. Otherwise, the support should be classified as Defense or Foreign policy, not foreign aid. Thus, aid results could be improved by its formal dissociation from foreign/defense policy.

Third, aid results can be enhanced by increased emphasis on implementation of projects. Since projects are often learning experiences in themselves with many unexpected consequences, it would be more useful if AID were directly responsible for both programming and execution. Currently, the knowledge that private contractors implement aid with only periodic official oversight tends to weaken AID incentives to develop innovative project implementation approaches based on lessons learned. While much has been written on this, little finds its way into institutional routines and repertoires. For example, roles might be reversed with private contractors overseeing and evaluating AID project implementation. AID would gain corporate memory and experience; contractors could tear into AID activities with a vengeance that would ultimately enhance results. Both parties would have every incentive to perform; greater trust and a better working relationship would result.

The field results of US aid are a product of goals translated by institutional rules and roles. The predominant goal of the foreign aid program has been security, and this definition is largely the product of inordinate DOD, Armed Service Committee and State influence over the scope of the program. DA has its advocates in the process: USAID and multilateral agencies, such as OAS and World Bank. Early postwar US aid to Europe was both developmental and multilateral. In a stable world, unsullied by petty tyrants and terrorists, total DA emphasis would be appropriate. The US could provide capital grants and technical assistance for projects similar to the US Office of Economic Opportunity (OEO), Economic Development Administration (EDA), and urban redevelopment. Security problems, of course, have had little to do with the success or failure of federal poverty and development programs, other than where a housing project is overrun with crime.

But in the Third World, projects are not implemented in a stable federal system where roles are relatively clear and conflict eventually leads to rival trust (or program termination before it occurs). Aid projects in El Salvador, for example, must also contend with left (FMLN) and right (ARENA) extremists who fear loss of support from successful US aid projects. The “outside agitator” premise on communist infiltration is obviously exaggerated and produces an almost total concern with East-West issues when the substantive issues are local (Turkey versus Greece over Cyprus).

Nevertheless, outside agitators seem to make unscheduled appearances to fill US-created political vacuums in places like Nicaragua. Hence, the solution to what become regional security problems, after years of neglect and indifference to developmental issues, has to be something more than disbursement of more DA funds. While this dilemma should not lead to support of additional outside agitators, such as aid to roving bands of exiles from the last coup, security assistance to the military “centers” of neighboring countries to build up political centers as in El Salvador, cannot be resonably [sic] opposed. Even more important than the appropriate mix of development-security goals behind aid is the degree of prior mutual consensus between recipient and US aid planners. Where the recipient agrees on the purposes of aid, improved results usually follow (Taiwan, South Korea, Egypt and Brazil). Whatever form the aid takes (ESF, PL 480, FMSC, MAP or DA), success depends less on the right mixture of aid subprograms than on mutual agreement on how the funds should be spent properly. What this suggests is that even abstract “liberal” premises of aid may be appropriate if both recipient and US agree to their translation into programs meeting local needs. Aid to Costa Rica, Venezuela, Colombia for “liberal” political purposes such as electoral democracy worked reasonably well because both parties to the transaction agreed, i.e. aid was not perceived to be a mere quid pro quo for US leverage.

In theory the, all aid need not be either DA or military aid to achieve success. On the other hand, under current usage of the term, “aid” means all things to all people – it builds clinics, supports Contras, trains teachers, mines ports, and provides arms to petty tyrants. To improve such issue analysis and program marketability to the US public, foreign aid should be divided into clearer responsibility centers. USAID should be responsible for PL 480- and DA aid. DOD should be responsible, i.e. pay for, all military aid. ESF funds fall in the gray areas between the two. AID manages them with State guidance, and many are spent for defense-related purposes. Hence, it may be more appropriate to draw ESF funds from the DOD budget and let AID manage them for agreed upon purposes. This would leverage executive policy-making control away from DOD-CIA-OMB technocrats and State senior staffers. With greater authority to influence development of the Integrated Request each year, those in AID who work daily on both foreign aid and its political implications would have more voice in policy-making. This additional authority would remove some of the incentive to institutionalize criticism that detracts from program implementation. As noted, AID receives most of the responsibility and criticism for the total foreign aid program with little effective authority to control its scope or direction.

For the late 1980s, the goals of US foreign aid are likely to remain the same except that the notion of “profitability” will lead to even greater unexpected political results. Increasing evidence that rightist authoritarian regimes have neither more rational economic policies nor greater in US-style political democracy have led to the logistical question: For what was all the US aid used then? In Haiti and the Philippines the answer is clearly: personal profit for the ruling kleptocracy and oppression of legitimate opposition to the regime. That such uses of foreign aid are both financially and politically unprofitable for the US is evident now to even the Reagan Administration. Other Republican leaders such as Undersecretary of Treasury for International Affairs David Mulford, have recently opposed loans to Chile on human rights grounds. The point is that viewed by key policy actors as a high risk political and financial proposition, aid can achieve liberal developmental ends. To this end, more policy analysis and issue debate is required to avoid incrementally recycling the mistakes of the past. One can expect to see increased emphasis in time, resources, and media interest in foreign aid authorizations and appropriations which can only benefit future aid results.

Even if initial mutual agreement could be reached between US and recipients on the scope, purpose and pace of aid, the current rules by which foreign aid is planned and implemented would continue to constrain effective action. We have seen that externally, foreign aid must deal with G-R-H “outlay savings” zeal and that this penalizes early year, rapid paced outlays like military aid or capital projects. To subject an already confused program, promulgated annually from the conflicting pressures of institutional actors with entirely different objectives and grasps on reality, to arbitrary across-the-board cuts for the “abstract” objective of a balanced budget is both inefficient, and naïve. For, in the long run, such “savings” are likely to contribute to greater deficits as required military expenditures increase in world trouble spots to put out fires that earlier aid might have remedied by providing leverage and construction of stable political centers. A lesson of El Salvador is that even under textbook conditions, building the center is a costly and long-term commitment.

Similarly, Congress tries to make foreign aid policy via continuing resolutions, earmarks, supplemental, conditions and prohibitions on executive requests. The executive responds by “counter-control” techniques such as reprogramming, transfer, deferral and rescission to make ends meet and preserve managerial flexibility. Though the executive usually “wins” such bureaucratic wars, they waste time and resources that could be spent on effective implementation. These kinds of “wargames”, made even more deadly by resource cutbacks likely to results from G-R-H, also diminish time available for debate on regions and countries that do not have current “hotspot” status.

Earmarks and other constraints are expressions of congressional distrust of the President, learned from such historical crises as Vietnam; transfers and deferrals are expressions of executive distrust for a Congress perceived to be sluggish and ill-informed on international issues. This tension cannot lead to healthier debate and better policy results until adversary roles and responsibilities are clarified. The arbitrary interventions by Congress then encourage AID to create a defensive superstructure of rules. Such rules stress elaborate programming over innovative implementation and this damages foreign aid results. However, stronger leadership on the authorizing committees and appropriations subcommittees is already enhancing the role of congressional guardianship in foreign aid. Needed is a more objective standard for aid disbursement than the political visissitudes of the moment. For example, the appropriations process could be strengthened by use of agreed upon guidelines or a “formula” for disbursement of aid. Simon (Washington Post, June 14, 1975) argues that foreign aid is disbursed largely on “whim or casual conversations of a Secretary of State with a foreign aid official.” He suggests that “no other government program provides as unrestrained an opportunity for executive expenditure as does our foreign economic aid.” Use of a “needs based” formula that also stresses “restraint on military spending” and “respect for civil liberties”, however, might increase congressional propensity to earmark. But it could also provide a mutual focus for bureaucratic rivals, reducing fragmentation and distrust.

The rules of the game for recipient side have also been discussed briefly. ESF aid, for example, is deposited in recipient central banks for withdrawal according to agree-upon purposes. Usually, as in the case of Marcos officials using aid funds for his re-election campaign, there is no specific mutual agreement, especially where base rights are the quid pro quo. Hence, cronies of the regime can spend millions in US funds for personal preferences (often consumer and military goods) and the US usually does not dramatically intercede from fear of neo-imperialist backlash.

In the case of Taiwan, US foreign aid was placed in a separate extrabudgetary recipient’s fund. In contrast with AID policy in many countries where US dollar aid or aid-generated local currency becomes part of the governmental budget, aid to Taiwan was administered outside the budget by semi-autonomous institutions. During the 1951-65 period, Chiang Kai-shek wanted to increase military expenditures to recover Mainland China from the Communists (a personal agenda). Through the extrabudgetary fund mechanism, the US was successful in both keeping the lid on Taiwanese military expenditures and preventing fungibility of funds for development purposes (Jacoby, 1966: 221-222). This mechanism prevented substitution of military funds demanded by the powerful military establishments for its “development” priorities. The key to effectiveness of US aid to Taiwan was also the high degree of competence and personal continuity of local oversight institutions – the Council on International Economic Cooperation and Development, and the Joint Commission on Rural Reconstruction (1966: 59). Where large amounts of US aid tax the absorptive capacities of small regimes often besieged by a variety of opponents, opportunities for fund diversion are enormous. Since this costs the US leverage as well as out of pocket sums, both AID and Congress should ensure that aid is not disbursed before: (1) mutual agreement on its uses (meaning more recipient input into project shape and on the participation of US contractors) and (2) agreement on extrabudgetary funds and oversight commissions are reached.

The most serious constraint and the greatest opportunity for improving foreign aid results lies in role redefinition and clarification. Currently, foreign aid policy is formulated by a host of bureaucratic spenders with different primary missions and different sets of assumptions. Though such diversity can be good, differences in institutional power prevent translation of differing premises into a coherent policy product. Guardians such as Congress act significantly during crises but do not exercise consistent programmatic oversight. Congressional foreign aid policy-making thus lacks coherence. Operating in piecemeal fashion, this permits the most powerful actors in the executive branch to exercise primary control. AID has the least influence on practically every issue, meaning that despite AID’s elaborate programming and the apparent consensus generated recently by the SAPWRG process for an Integrated Request, final policy is still a product of power politics between DOD-Armed Services Committees-contractor lobbies and softer perspectives exercised by weaker actors such as AID and State. Agency positions on aid cannot always be predicted. But AID’s influence is marginal, limited often to siding with the agency likely to carry the day in order to reduce external criticism and ensure future funding (continuing resolutions). Shifting patterns of dominance between the executive generally and Congress on particular issues leads to many unexpected consequences and the establishment of rigid ties with client regimes that can produce trouble later. […]

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