THE Agency for International Development is an agency that has, almost literally, been studied to death. Last month Clifton Wharton, the new deputy secretary of state, announced yet another "special" 90-day study of the United States foreign aid program.
Before concluding their review, Mr. Wharton and his colleagues would do well to look closely at the case of the Republic of the Ivory Coast. The economic saga of that country forcefully illustrates what has happened in much of the third world in the last decade, and where the West should - and should not - look for solutions.
The story starts in the 1960s. With strong encouragement from the World Bank, the International Monetary Fund, and other Western institutions, Ivory Coast set out on an ambitious course to grow and export coffee and cocoa. The program worked, and Ivory Coast became a "country that worked."
By the mid 1970s, the country's gross domestic product was growing at nearly 8 percent annually; Abidjan, the nation's capital, was becoming a modern, regional commercial center, and Ivory Coast had the best road system in all of sub-Saharan Africa. By 1978, Ivory Coast was the world leader in cocoa production and was third in the world in coffee production.
Foreign exchange earnings supported infrastructure and economic development and the "Ivorian Miracle" was recognized throughout the world.But something happened on the way to prosperity. The bottom fell out of world coffee and cocoa prices. By 1982, the price of Ivory Coast's exported coffee stood at $1.20 a pound, compared with $3.40 in the mid-1970s. Except for a brief upswing in prices in 1985-1986, both coffee and cocoa sales continued at low levels.
WHEN I met with Charles Gomis, Ivory Coast's ambassador in Washington, he had just been on the telephone with his consul general in New York, who reported that coffee prices on the New York exchange had fallen to 80 cents a pound - less than 25 percent of the market price 15 years ago.
The result of all this was predictable: Ivory Coast's public external debt is a staggering $14 billion. The country has experienced six consecutive years of declining gross domestic product. Per capita income has dropped from $1,150 in 1981 to around $700 today. In short, this once-shining example of market vitality has plummeted from a nation on the move to a nation in crisis.
What, if anything, should the US and World Bank do about Ivory Coast and the other Ivory Coasts of the world? A more flexible and creative approach to "providing assistance" is needed.
Ivory Coast is currently losing about $2 billion a year because of depressed export earnings. Mr. Gomis points out that if world market coffee and cocoa prices would rise only halfway back to their earlier levels, his nation could fund all the US economic assistance to the African continent and still have some $220 million for internal development.
At the moment, the World Bank is withholding important loans to Ivory Coast while bank official are pressing Abidjan to devalue its currency.
Everyone knows the currency is over-valued, but Ivory Coast participates in a currency regime with 12 other West African countries. Their franc is pegged to the French franc at 50 to 1, and Ivory Coast does not have the power to unilaterally devalue its currency, even if it wanted to. In the meantime it waits for World Bank financial support.
No one can wave a magic wand and instantly produce what Ivory Coast really needs: higher commodity prices. But the new US administration should understand that if it is to provide meaningful help, it will not be with the standard package of development "projects."
Real help will come in the form of creative financial approaches and debt relief through the willingness to at least sit down and talk about a possible US-Ivory Coast commodity purchasing arrangement.
In the short term, the Clinton state department would also do well to strongly suggest that the World Bank unlink currency devaluation demands from pending loans. Everyone is in favor of long-term structural adjustment. But without short-term relief, the governing institutions that can focus on the long term will themselves be under siege.