USAID & Economic Assistance in International Relations

by Michael Roach

American foreign policy in the post-Cold War era has been the defining tightrope act in today’s global politics. There have been calls from both “doves” and “hawks” on this issue, with President Obama’s administration treading a fine line between the two extremes.

USAIDHowever, in a dynamic and polarizing arena such as international diplomacy, staying in a “middle ground” can be worse than taking a side.
As we have seen, military intervention can be quite a tricky situation: intervene in one situation and you’re a warmonger, if you don’t intervene in another you will be criticized, not to mention the economic costs of either choice.

“Damned if you do, damned if you don’t” foreign policy at work.

Economic assistance to other nations, on the other hand, carries with it fewer consequences than military assistance, mostly due to the lack of coverage economic transactions get in the press and American discourse.

Yet, economic assistance carries with it as much symbolism and impact on the international political discourse as military acts. The lending or
transfer of funds to a foreign government is not just done for humanitarian reasons; it also serves as a subliminal endorsement of those governments’ policies. The term “endorsement”, however, carries with it a dual meaning: the approval of that government’s policies or ideologies and a “contribution” made to that government in order to develop friendly relationships- a.k.a. a bribe.

Recent events have prompted across the country a review of what we give and, more importantly, who we give it to. This review has highlighted the divide between ideology and strategy in the economic foreign aid market the United States participates in.

For instance, the Ugandan government signed into law on February 24 anti-gay legislation, the Ugandan Anti-Homosexuality Act, which effectively outlaws any kind of same sex relationships or behavior and brings down harsh penalties which have included life imprisonment and even the death penalty.

President Obama, among other world leaders, has denounced the new bill. According to Al-Jazeera, “The United States is Uganda’s largest donor, sending more than $400 million in aid annually in recent years. If Museveni signs the bill, the U.S. could find ways to register disappointment over the law.”

In other words, aid money can be used or withdrawn depending on a country’s ideological or government policies. Nonetheless, in the circumstances of Uganda, the United States will not be so eager to rush to pull funding. As, according to Al-Jazeera, “Uganda depends on donors for about 20 percent of its budget”, there would probably be hesitation due to the consequences involved in pulling millions of dollars in development aid from the country.

Conversely, not every foreign aid situation is a straight-forward as the Ugandan dilemma. Take for instance the situation in Pakistan. According to the USAID Foreign Assistance Database, economic assistance to Pakistan in the fiscal year 2001 was approximately $92 million. In the fiscal year 2012, this economic assistance increased to approximately $640 million.

Yet, Pakistan’s initiatives to take on the Taliban and terrorist cells in the region, as well as support other United States initiatives have been less than forthright. Our modern relationship with Pakistan started in response to India’s alignment with the Soviet Union during the Cold War, in order to gain a stronger foothold in the region. Now that the Cold War is over, part of the aid money that goes to Pakistan is to avert conflict between India and Pakistan, according to BBC News.

With Operation Neptune Spear, the NATO-U.S. operation that successfully killed Osama Bin Laden, relations between Washington and Islamabad have diminished greatly as some in the United States speculated that the Pakistani government may have knew about Bin Laden’s hiding in Abbottabad, Pakistan and may have even assisted him.

Naturally this has also created a conflict of interest in the foreign aid department. While we do have a humanitarian outreach to Pakistan through foreign aid, we still have strategic reasons for giving aid as the United States tries to hold on to as many allies in the region as possible.

In 2012, according to USAID, Russia has received approximately $293 million in economic assistance and China has received $49 million. This just highlights how far the $48.4 billion in foreign aid reaches across the world. Whether this is seen as a waste or a strategic necessity, American influence via economic aid cannot be ignored.

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