Foreign Aid on the Chopping Block

BY targeting foreign aid for major spending cuts, the incoming Republican congressional majority has provoked a foreign-policy row with the Clinton administration.

At issue is how many United States tax dollars should be given to other countries, especially those that are unfriendly, when America's own needs are becoming so pressing and resources so constrained.

Sen. Jesse Helms (R) of North Carolina, the incoming chairman of the Senate Foreign Relations Committee, has said bluntly that most foreign aid is thrown down ``rat holes.''

The Clinton administration has reacted sharply to the GOP plan to slash the $13.7 billion foreign aid program and change the way assistance is awarded.

J. Brian Attwood, the head of the foreign-aid dispensing US Agency for International Development (USAID), commented recently: ``The threat is international disorder, and it is a strategic threat because it endangers the political, economic, and security interests of the United States.''

The Clinton team accuses the Republicans of neo-isolationism, saying their policy could fan international instability, jeopardize US strategic interests, damage the domestic economy, and cost American workers jobs by limiting global trade opportunities.

Sen. Mitch McConnell (R) of Kentucky counters, saying: Allowing foreign aid to remain untouched while domestic spending is slashed ``isn't going to fly.'' He will lead the GOP foreign-aid cutting effort as the new chairman of the Senate Appropriations subcommittee on foreign operations.

All foreign aid programs, except those for Europe and the Middle East, will face cuts of 20 percent next year, Mr. McConnell says.

Administration officials concede that the US aid program has been marred through the years by waste and abuse and that some overhauling of USAID operations are justified.

They argue, however, that as a relatively tiny portion of the $1.5 trillion federal budget, foreign aid produces massive benefits for the US. It helps maintain global security, they say, by addressing root causes of instability, including poverty and overpopulation. In addition to this ``crisis prevention,'' officials say, US aid is underwriting economic reforms in emerging democracies and opening new markets for US exports and investments.

``Developing nations now represent the fastest-growing markets for American goods,'' says Mr. Attwood. ``They are growing 10 times as quickly as our traditional markets in Europe and Japan.''

The Republicans dispute whether foreign aid really helps recipients, especially poor countries, to develop stable, growing economies that allow them to end their dependence on outside money.

``Aid is not necessary for economic development,'' asserts Thomas Sheehy, the coauthor of a new study by the Heritage Foundation, a conservative think tank that is playing a key role in shaping the Republican congressional agenda.

The study of 100 countries, called ``The Index of Economic Freedom,'' contends that only by embracing free-market systems can developing and poor nations attain the economic growth needed to solve population, environmental, health, and other social problems at which US foreign assistance is targeted. Those with state-controlled economies are doomed to suffer these problems no matter how much foreign aid they receive, concludes the study, which was released last week.

The document recommends that assistance be given only to countries working to establish free-market economies and those where the US has important strategic interests.

The study has been embraced by Senator McConnell in his determination to revamp US foreign aid. He has announced that he will introduce legislation to make foreign aid contingent on protecting US security and economic interests and bolstering regional security. And he wants to transfer USAID's functions to the State Department.

The GOP plan would change the rules for granting aid to Africa, currently at $800 million, and population programs, which receive $450 million. These would now have to compete with other programs for funds from a general assistance pool.

Dr. Kim Holmes, a Heritage vice president, says: ``Most of our development aid is given to countries that do not deserve it. Economic development aid is really a form of international welfare.''

In a counterattack, USAID disputes the study's key claim that no foreign aid ``has succeeded in developing sustained economic growth.'' Among other things, USAID points out that the famed Marshall Plan resurrected Western European economies after World War II. It further points out that 19 of the first 20 countries the Heritage study ranks as having the most successful economies are former or current US aid beneficiaries.

``It makes no sense to discuss foreign aid in the abstract. It can only be discussed on a case-by-case basis,'' says Jeanne Kirkpatrick, an American Enterprise Institute analyst who served as the Reagan administration's US envoy to the United Nations.

Many foreign-policy experts say that it is impossible to build a cogent foreign-aid policy on the limited criteria the study recommends.

A Washington-based international economist took issue with the study's assertion that US development aid ``has been wasted.'' He said that while the United States has contributed $21.27 billion to the World Bank since 1945, US corporations have won contracts worth $23 billion from the institution for a $1.80 return per $1 invested.