US aid to third world is now starting to slip

Congress is approaching its annual hassle over foreign aid at a time of crisis in world finance and with a low mark on the Western world's "generosity index."

The United States currently stands 13th among the 17 nations of the Development Assistance Committee (DAC), a group of industrialized Western nations helping so-called less developed countries (LDCs) through financial assistance.

Debts of the LDCs have stretched to the near-snapping point, Douglas J. Bennet Jr., administrator of the US Agency for International Development, has warned. The foreign aid picture today shows that:

* LDC debt was only $58 billion in 1970. Today it is $370 billion. US Federal Reserve Board chairman Paul A. Volcker recently warned US banks to be cautious in loans to the third world.

* Interest payments alone now take 12 percent of the LDCs' export income; this is expected to rise to 19 percent by 1990.

* Some economists are concerned that if LDCs defaulted on loans it could have a domino effect on world finance.

* So serious are current world problems that a just-issued, 300-page study by the Independent Commission on International Development Issues, headed by former West German Chancellor Willy Brandt, urges a summit meeting of world leaders. The situation is likened to "the years before the Second World War."

* The United States is the world's largest contributor of foreign aid. But as a percentage of annual gross national product (GNP), US contributions lag behind other Western countries.

Seventeen nations in the DAC set a goal of 0.7 percent of their GNP for foreign aid. Some of those that fell short were France, 0.57 percent; Canada 0. 52; Great Britain 0.48; West Germany 0.38, and the United States, 0.27 percent.

The US figure contrasts with the era of Marshall Plan aid to Western Europe following World War II, when the US gave 2 percent of its GNP. "I do not believe that the American people could be indifferent to poverty and starvation anywhere in the world," says former Chancellor Brandt reproachfully in his new study.

Considerations like the above add to the anxiety here over Soviet-US relations. The United States should bolster the third world, proponents of stepped-up foreign aid argue, not merely for reasons of compassion, but of self-interest. The US needs to allay the jealousy of US prosperity by hungry and possibly communist-prone poor countries, they argue, and at the same time make markets for its own goods.

US prosperity is increasingly bound up with the prosperity of the LDCs in an interdependent world. One out of every eight US manufacturing jobs now depends on exports; every third farm acre produces for export; exports of goods and services contribute $200 billion to the US GNP.

This year's appropriations for foreign aid and international banks have bogged down in Congress. The US is running about $1 billion behind the tentative commitments a series of US presidents have made.