Magazine November 28, 2011, Issue

Conservative Foreign Aid

There is such a thing, but the GOP presidential candidates haven’t defined it

There is no softer target in GOP primaries than the United Nations and foreign-aid spending. Nonetheless, it is worth asking whether a blanket “Cut this now!” approach really makes sense, even in a year when cutting federal spending is a necessity. Let’s consider what the Republican presidential candidates are saying, and ask what “foreign aid” is anyway.

Perhaps surprisingly, there are stark differences between the candidates on foreign aid. Ron Paul has the clearest position: Cut it all. As Paul put it at the Republican debate on October 18, foreign aid “should be the easiest thing to cut. It’s not authorized in the Constitution that we can take money from you and give it to particular countries around the world. To me, foreign aid is taking money from poor people in this country and giving it to rich people in poor countries. . . . No matter how well-motivated it is . . . I would cut all foreign aid.”

Such an approach leaves Paul alone in the field, in that he wants to cut military aid to Israel as well as assistance to other countries. More typical is Herman Cain, who in the same debate said: “If we clarify who our friends are, clarify who our enemies are, and stop giving money to our enemies, then we ought to continue to give money to our friends, like Israel.” Michele Bachmann agrees about Israel, calling it “our greatest ally” in 2008, but made clear that it is an exception: “The United States is the most generous nation on earth. We have to have a balancing act between our benevolence and our prosperity. And our prosperity today is at risk. We will not survive if our benevolence allows the Treasury to not only be empty, but to have us be a debtor nation greater than we have ever been before.” Rick Perry was cautious: “I think it’s time for this country to have a very real debate about foreign aid.” And Mitt Romney appeared to be generally against foreign aid: “I happen to think it doesn’t make a lot of sense for us to borrow money from the Chinese to go give to another country for humanitarian aid,” he said. When asked later whether this meant he favored zeroing out all such assistance, his campaign replied that he did not: “The goal of assistance programs must be to enhance the security and prosperity of the United States and our allies, and the programs must be effective. This means focusing our assistance . . . on those programs that best support an international system based on free markets, representative government, and human rights.”

By expressing clear support for humanitarian assistance, Rick Santorum has taken a distinctive position among the candidates. In an April 2011 speech, he called “generosity and humanitarianism” a “unique feature” of American society. He continued: “We need to keep our commitment to humanitarian aid, especially in Africa. China and Islam are competing for the hearts and minds of much of Africa, and we cannot turn our back from the investment and commitments we have made. I helped lead many of our efforts to address third-world debt and the global AIDS crisis, and our investments have paid off. For example, 200,000 babies do not have AIDS today who otherwise would have, and millions of people are alive today due to American-provided anti-viral drugs. This is what I call pro-life foreign policy. And it is one of our best international investments, especially considering less than 1 percent of our budget goes to such foreign aid.”

#page#The case of Israel brings up a key question in the debate over foreign aid: What exactly is it? Israel, for example, receives no American economic assistance, only military aid. Those who want to cut economic aid need not fear the impact of such a step on the Jewish state.

How much “foreign aid” the United States gives depends on one’s definition. The figure usually cited is roughly $50 billion, but that number counts everything from military aid to the Voice of America to our U.N. dues. It also counts especially high amounts in the last decade for Afghanistan and then Iraq, on programs that will certainly decline in size in the coming years. Most countries count only non-military aid in the term “overseas development assistance,” and by that definition the United States gives about $30 billion — still more than any other country. This number counts economic aid, food, health care, refugee assistance, and a wide variety of programs, good and bad.

The problem with “overseas development assistance” as a measure of our foreign aid is what it excludes. It counts federal spending only, but such spending is just one part of the picture. Hudson Institute’s invaluable annual report “Index of Global Philanthropy and Remittances” reminds us how much more there is. The latest Index, for 2011, says that total U.S. “economic engagement” in developing countries in 2009 was $226 billion. Of that, roughly $70 billion was in private-capital flows such as business investments, and $90 billion was in remittances, the money individuals who have immigrated to the United States send back to relatives in the countries from which they came. And while our official foreign aid was just under $30 billion, and what the federal government calls “bilateral economic assistance” was $20 billion, the amount of private philanthropy — through churches, charities such as Samaritan’s Purse and Save the Children, foundations, corporations, and so on — was far higher, at $37.5 billion.

Thanks, initially at least, to the writings of Lord Peter Bauer, a late British economist and close adviser to Margaret Thatcher, conservatives have understood for decades that government bureaucracies are not the most efficient entitities to help economies develop. Government-to-government aid, argued Bauer, increases the size and power of government in the receiving country instead of enlarging the private economy and empowering individuals. The result, concluded the World Bank in 1997, was most often corruption and inefficiency: “Governments embarked on fanciful schemes. Private investors, lacking confidence in public policies or in the steadfastness of leaders, held back. Powerful rulers acted arbitrarily. Corruption became endemic. Development faltered, and poverty endured.” This was Milton Friedman’s view as well, and he once said that “foreign aid has done far more harm to the countries we have given it to than it has done good. Why? Because in every case, foreign aid has strengthened governments that were already too powerful.”

Those arguments, iconoclastic when Bauer and Friedman started making them in the 1950s, are accepted by almost all conservatives now. Theirs is the kind of thinking that led George W. Bush’s administration to invent the Millennium Challenge Corporation (MCC), a new approach to development assistance. Separate from the U.S. Agency for International Development and designed to be a more private-sector-oriented agency, it promotes democracy, free markets, transparency, and rigorous testing of the effectiveness of aid programs in generating economic growth. USAID’s operating budget is about ten times that of MCC, however, so the Bush approach must still be said to be embryonic.

#page#What has been striking about the Republican debate so far is that the arguments have been sweeping rather than careful. It would be easy to argue, for example, as only Rick Santorum has done, that humanitarian aid is valuable and within the American tradition, while economic-development programs often fail. Or to note that more of our aid should be conducted through private charities — which have very low overhead costs — instead of through USAID or “Beltway bandit” companies around Washington that get billions in federal contracts to carry out work in the third world. While USAID does channel many programs through private charities, the vast amounts that go to private firms (often staffed by former USAID employees) ought to be an obvious target for cuts. Republicans might also argue for shifting more aid to MCC, or for closing down most of USAID and using private charities to deliver more assistance.

Missing as well is a discussion about what forms of aid we really might want to continue providing. Should we favor straight humanitarian aid but end economic-development assistance, for the reasons Lord Bauer presented decades ago? Isn’t it a touch hard to believe that the best way to promote entrepreneurship and individual autonomy in poor countries is to fund programs run by American bureaucrats, most of whom have never actually been part of the private economy? Another issue: Should we continue food aid, the old P.L. 480 programs (so called for the part of the legal code establishing them)?

And, far from the least important matter, should we increase or abandon efforts to promote human rights and democracy? Do Republicans believe that this is a luxury we cannot now afford, or should it be the core of any good foreign-aid program? The National Endowment for Democracy was created by Ronald Reagan during the Cold War, and its budget was enlarged by George W. Bush after 9/11. Not very much is spent on its efforts — its budget is roughly $115 million per year. If promoting democracy is a bad idea, why not stop; if it’s a good idea, why aren’t we doing more of it?

None of these issues has been carefully analyzed in the presidential-primary campaign, partly because the foreign-policy debates are to be the last face-offs and moderators in the debates have so far asked little about foreign affairs. Such matters are not foremost in voters’ minds, perhaps; but they can give us real insights into the candidates’ views of the world and America’s place in it.

What should be noted is that there is a huge distance between the combination of nationalism and internationalism that we saw in Ronald Reagan’s leadership, and what some of the Republican candidates are saying today. Reagan’s 1984 platform is worth revisiting. First, Reagan did not seem to contemplate eliminating economic aid:

Developing nations look to the United States for counsel and guidance in achieving economic opportunity, prosperity, and political freedom. Democratic capitalism has demonstrated, in the United States and elsewhere, an unparalleled ability to achieve political and civil rights and long-term prosperity for ever-growing numbers of people. We are confident that democracy and free enterprise can succeed everywhere. A central element in our programs of economic assistance should be to share with others the beneficial ideas of democratic capitalism, which have led the United States to economic prosperity and political freedom.

#page#Nor did Reagan want to cut military aid. His platform makes a prescient reference to terror: “Foreign military assistance strengthens our security by enabling friendly nations to provide for their own defense, including defense against terrorism.” It also suggest that aid is for friends only: “To strengthen bilateral foreign assistance, we will reduce or eliminate assistance to nations with foreign policies contrary to our interests.” And the platform argues for strong U.S. support for human rights and democracy:

The American people believe that United States foreign policy should be animated by the cause of human rights for all the world’s peoples. . . . Republican concern for human rights also extends to the institutions of free societies — political parties, the free press, business and labor organizations — which embody and protect the exercise of individual rights. The National Endowment for Democracy and other instruments of U.S. diplomacy foster the growth of these vital institutions. . . . The National Endowment for Democracy has enlisted the talent of private American institutions, including the AFL-CIO and the U.S. Chamber of Commerce, to educate our friends overseas in the ways of democratic institutions.

This was not just charity:

For Republicans, the struggle for human freedom is more than an end in itself. It is part of a policy that builds a foundation for peace. When people are free to express themselves and choose democratic governments, their free private institutions and electoral power constitute a constraint against the excesses of autocratic rulers.

What might a conservative foreign-aid program look like, then? It may well be nearly as large as the current one, but much more efficient and effective. There are many programs that need a careful look. For example, what have we really achieved by spending roughly $2.5 billion a year in Pakistan, where we appear to be hated more widely every year? If Egypt moves away from peace with Israel, and indeed from democracy and religious freedom, under its next government, at what point do we stop giving it $1.5 billion a year? Do we have to spend $1.5 billion a year on “bilateral and multilateral programs to address global climate change”? How about the hundreds of millions the administration wants to send to the International Clean Technology Fund and the International Strategic Climate Fund, both of which appear to be searching for overseas versions of Solyndra?

We might attend to some good advice from Paul Bonicelli, now the executive vice president of Regent University, who in the George W. Bush administration was dispatched to USAID rather like a missionary sent to live among hostile tribes.

First, Bonicelli says, we should remember that poverty is not the product of a lack of resources, but rather of culture, bad economic policy, and bad government (including corruption). Ultimately, aid money is wasted unless it promotes free markets, respect for private property, and the rule of law. Unless we are promoting political and economic freedom, we are treating symptoms, not causes, for we are not giving people the tools to fight their poverty themselves.

Second, we should target aid money at friends and allies — as Bonicelli puts it, “those who are our allies, are plausibly our allies, could be induced to be our allies, and those who want to be our allies but are repressed and need our help to be free.” He notes that the last category includes democracy activists who are effectively governments-in-waiting and may eventually become aid donors themselves, as former aid recipients in South Korea and India have done.

Bonicelli concludes that giving money to corrupt and dictatorial regimes will never work, but that promoting free markets and freedom itself will. He favors continuing to fund the National Endowment for Democracy, as well as the Millennium Challenge Corporation, because “there are always Lech Walesas to support and there are always commonsense ways for government to dispense aid.”

He is right. A conservative approach would strengthen our friends around the world and help reduce poverty and oppression by supporting the rule of law, private property, and free markets. It would recognize that private efforts — whether motivated by the search for profits, the desire to help family members overseas, or religious faith and pure humanitarianism — are far larger and more effective than official aid programs, and that private voluntary organizations are usually far more efficient than government agencies. It would confidently assert that we have the proven formula for development, namely political and economic freedom. And it would demand that our aid programs be designed to promote that formula with the greatest possible efficiency and the least possible bureaucracy.

Cutting “foreign aid” is a reliable applause line, but it is fair to ask candidates who seek conservative votes to be a bit more specific. Just where do they think Ronald Reagan had it wrong?

– Mr. Abrams, a senior fellow of the Council on Foreign Relations, was the deputy national security adviser handling the Middle East in the George W. Bush administration.

Elliott Abrams is a senior fellow in Middle Eastern Studies at the Council on Foreign Relations and a former deputy national-security adviser.

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