/ 3 April 1998

No share for the poor in US bounty

Arnab Neil Sengupta : A Second Look

For weeks now, the Congressional Budget Office and the White House have been crowing about the United States government’s first budget surplus in 30 years. The rough estimate – $8-billion – is small change by US standards, but it is likely to grow over several years.

Whether this surplus should be used to protect the social security retirement programme or pay the federal debt is for US lawmakers to decide. But one thing is for sure: it will not go into foreign aid.

This is despite the latest World Bank warning that “decrease in foreign aid threatens many of the poorest countries in the world, which are most in need of capital but have the least ability to attract private money”.

The World Bank’s annual report on aid and investment comes against the background of US President Bill Clinton’s highly publicised visit to Africa, home to many of the world’s poorest countries.

For all the US administration’s careful emphasis on “trade, not aid” in defining future relations between America and Africa, the World Bank predicts that “long-term investment flows to developing countries may fall in 1998, adding to the problem caused by the ongoing decline in aid from rich countries”.

What do these dire forecasts mean on the ground? Consider what every $1-million in foreign aid can accomplish in a developing country.

* It can provide credit services to 7 000 poor women for five years. That’s bringing smiles to the faces of 7 000 Third World women at the cost of a hundred scowls on Capitol Hill.

* The same sum can cover, for two years, the cost of an integrated development programme involving income generation, education, community infrastructure and management of water resources in 100 villages. And Hillary Clinton was talking of just a village.

* One million dollars can pay for the education of 100 000 children for one year. Bear in mind that a year of education in an entire lifetime is an unheard-of luxury in large parts of the world.

* The same amount can provide nutrition to 10 000 nursing mothers for an entire year. That could mean the difference between life and death for many of these women, not to speak of their children.

Now multiply any one of these by a factor of 1 000 and subtract the result from development work in the world’s poorest countries for every $1-billion drop in foreign aid.

The total setback to developing economies can be gauged from the fact that official aid from Western governments plunged $37,3-billion in 1997 – a drop of 12,3% on the previous year. It is the fifth year in a row that foreign aid in the form of grants and soft loans have declined.

During just three of these years, by contrast, the boom in Wall Street created $4-trillion in new wealth for Americans.

Flush with good news from all sides – a buoyant economy, a budget surplus, soaring income tax revenue, falling unemployment and crime rates and historic low gasoline prices – the US is basking in the warm glow of prosperity.

This is the time, therefore, for Americans to not only count their money, but their blessings too. This is also a time to share.

No doubt even half as audacious a suggestion as increasing foreign aid can drive Republicans apoplectic and make Democrats wince. After all, whoever in his right senses would dare utter words like “development assistance” in the brave Newt world of Washington?

An anachronism foreign aid may be, but on the threshold of a new millennium, poverty, malnutrition, illiteracy and maternal deaths are no less anachronisms.

How is it that these shameful facts don’t rile the lawmakers of the world’s richest country the same way that talk of foreign aid does?

Once upon a time the rich and powerful had to travel to remote places to see for themselves what life was like for the world’s have-nots. But now, thanks to CNN, they get to see it round the clock, from their living rooms.

The economies of the fast-developing countries of East Asia are a shambles, and the fallout is expected to affect other Third World countries too, since global capital flows do not distinguish between geographic boundaries. Social tensions are boiling over.

Amid these developments, many Americans relieve their conscience by regarding themselves as a nation of givers. But in truth much of US philanthropy benefits only American causes.

And the tax dollars that go to aid the world’s needy make up barely 0,1% of America’s gross domestic product, compared to tiny Denmark’s 0,7%. The US foreign aid budget currently constitutes a minuscule 0,5% of the federal budget.

Overall, aid budgets – the most important source of development finance for the poorest countries – have fallen to 0,25% of the rich countries’ annual output from 0,35% in the early 1980s.

Much has been said about international largesse failing to scratch the surface of global poverty and about the growing army of highly paid development bureaucrats eating into international charity.

But the solution to that lies not in choking off the development-aid pipeline, but rather in reforming the system and shifting the emphasis to genuine grass-roots projects which make a social impact. Donor nations would, in fact, do the world’s needy a big favour if they applied strict business standards to development assistance and made sure their money was being put to effective use.

Increased foreign aid, whatever the strings attached, cannot be expected to raise living standards in developing countries overnight, but it can take more kids off the streets in Africa, bring safe drinking water to new villages in Asia and boost substantially the number of South American women who can start their own businesses from home on micro-credit.

These improvements may not always add up to good bang for the buck to increasingly tight-fisted donors, but they often throw to the beneficiaries a lifeline where there was none.

Some years ago, I visited a remote colony of cured leprosy victims in a backward region of India’s West Bengal state. Shunned by the area’s inhabitants, the colony’s 250 inmates led a primitive and totally isolated existence, with no electricity or sanitation facilities.

Their most precious possession, they revealed, was a tube well – the colony’s only source of drinking water. It had been sunk by a Western aid agency.