01 November 2007

The U.S. Foreign Assistance Spectrum

Steven Radelet

U.S. foreign assistance comes in many forms, including cash, commodities, and technical expertise, and through public, quasi-public, and private sources and initiatives. Steven Radelet is a senior fellow at the Center for Global Development, where he works on issues related to foreign aid, developing country debt, economic growth, and trade between rich and poor countries. He was deputy assistant secretary of the U.S. Treasury for Africa, the Middle East, and Asia from January 2000 through June 2002.

U.S. foreign assistance as we know it today traces its roots to the post-World War II Marshall Plan and to the founding of the International Bank for Reconstruction and Development, known today as part of the World Bank Group. These two efforts were fundamental in rebuilding Europe and establishing the foundation for peace, prosperity, and freedom in the aftermath of World War II.

The objectives and techniques of U.S. foreign aid programs have broadened substantially since that time. Today’s programs sustain diverse activities in areas of vital importance, among them agriculture, health, education, infrastructure, HIV/AIDS prevention and treatment, democracy, governance, volunteer programs, and humanitarian assistance during emergencies. In 2006, the U.S. government provided more than $26 billion in foreign assistance to some 120 countries and territories around the world.

U.S. foreign assistance comes in many forms, including cash support, commodities such as food or drugs, debt relief, and technical expertise. But the U.S. government is only one part of the story: The people of the United States provide even more through private charities, foundations, faith-based organizations, and individual efforts.

A hallmark of U.S. foreign assistance is that it supports not only governments but also nongovernmental agencies, faith-based organizations, advocacy groups, research institutions, and small-scale private businesses and entrepreneurs. This broad effort reflects the belief of most Americans that societal progress depends not only on government or private-sector efforts, but also on the joint endeavors of the public sector, private businesses, nonprofit groups, and individual initiatives. Around the world, it is not unusual to find U.S. agencies supporting economic research organizations; faith-based groups running schools or clinics; microfinance initiatives helping small private entrepreneurs, universities, and training institutions; and nongovernmental organizations involved in environmental awareness and human rights campaigns.

U.S. Government Assistance Programs

Most people associate U.S. foreign assistance primarily with the U.S. Agency for International Development (USAID). Established in 1961, USAID is the largest and most diverse U.S. government foreign assistance agency. It has stood at the forefront of efforts such as the Green Revolution, which helped feed millions of people by developing and distributing new varieties of rice, wheat, and other grains; immunization programs; maternal health; literacy training; the development of oral rehydration therapy to fight diarrhea; microfinance; and numerous other efforts. Today it operates a full range of development activities in countries around the world.

While USAID is at the center of U.S. foreign assistance efforts, it is joined by programs from the Departments of State, the Treasury, Agriculture, Defense, and Health and Human Services; the Centers for Disease Control; the Peace Corps; the Millennium Challenge Corporation (MCC); the African Development Foundation; the Inter-American Foundation, and several other organizations. In addition to these bilateral efforts, the United States ranks as the largest, or among the largest, contributors to critical multilateral organizations such as the World Bank, the United Nations, the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, and the Global Fund to Fight AIDS, Tuberculosis, and Malaria.

Five programs in particular illustrate the range of U.S. government foreign assistance initiatives beyond USAID’s development programs: humanitarian relief, debt relief, the Peace Corps, the Millennium Challenge Corporation, and the President’s Emergency Plan for AIDS Relief (PEPFAR).

Humanitarian Relief: The American people are at their best in helping others respond to emergencies and humanitarian crises. Like most people around the world, Americans believe deeply in providing a helping hand to those in need. Primarily through the Office of U.S. Foreign Disaster Assistance (OFDA), the United States was among the first to respond to the devastation of Hurricane Mitch in Central America in 1997. U.S. troops were quickly on the scene to provide food and emergency supplies after a tsunami struck Indonesia, Thailand, Sri Lanka, and other countries in December 2004. Indeed, whenever earthquakes, floods, or famines strike, or wherever a refugee crisis emerges, the U.S. government, private agencies, and faith-based organizations all are typically found at the forefront of the international response.

Debt Relief: Since the late 1990s, The U.S. Treasury Department has helped lead the global movement to relieve the poorest countries from often-crippling debts. A breakthrough came in 1997 when the United States and other shareholders of the International Monetary Fund, the World Bank, and other multilateral institutions agreed to the Heavily Indebted Poor Countries (HIPC) initiative. While the HIPC initiative called for substantial debt relief, it did not call for total debt relief — at least initially. That began to change in early 2000, when the United States became the first country to announce that it would forgive 100 percent of the debts owed to it by low-income countries qualifying under the initiative.

Peace Corps: Perhaps the signature U.S. assistance program is the Peace Corps. Most Americans subscribe to an ideal of individuals working hard, rolling up their sleeves, and pitching in to help others. The Peace Corps embodies all of those values. Over the past 45 years, more than 187,000 Americans have lived this ideal by serving as Peace Corps volunteers in 139 countries. Volunteers teach in local schools, support HIV public awareness campaigns, assist in agriculture extension activities, dispense business advice to small entrepreneurs, and help out with countless other activities. For millions of people around the world, their first opportunity to get to know an American is by meeting a local Peace Corps volunteer. And, importantly, Peace Corps volunteers return to the United Sates with a much greater appreciation for and understanding of the world’s peoples, and gladly share their experiences with other Americans.

MCC: One of the newest U.S. government foreign assistance programs is the Millennium Challenge Account (MCA). Established in 2004, the MCA is implemented through a new agency, the Millennium Challenge Corporation, and it works differently than most other assistance programs. MCA is based on the idea that government assistance works best when it supports well-governed countries that are committed to effective policies to fight poverty and accelerate development. Thus, the MCC selects countries to receive assistance based on their proven commitment to good governance, fighting corruption, investing in health and education, and establishing sensible economic policies. Once recipient countries have been selected, the MCC puts these countries in the driver’s seat, giving them the flexibility and responsibility to identify their highest priorities and to design and implement programs to fit their needs. So far, many countries have focused on road networks and other infrastructure projects, agriculture, and rural development. Programs are crafted to stimulate economic activity, to entice new investment, and to create jobs, and thus, in turn, to accelerate the pace of economic progress and reduce poverty. To date, the MCC has designated 25 countries as eligible for its main programs and has signed compacts with 14 others. It has also agreed to “threshold” programs with another 15 countries that have not yet met MCC eligibility standards but are on the threshold of doing so.

PEPFAR: Over the last several years, the United States has become the global leader in fighting HIV/AIDS around the world, mainly through the President’s Emergency Plan for AIDS Relief (PEPFAR) and through contributions to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Established in 2003, PEPFAR provides significant assistance to 15 focus countries, mainly in sub-Saharan Africa, and has other programs in dozens more. In its first four years, PEPFAR programs have helped extend the lives of more than 1.1 million people through antiretroviral treatment, averted more than 100,000 infant HIV infections by preventing mother-to-child transmission, and offered care to more than 4 million people affected by the epidemic. PEPFAR also has funded prevention activities reaching some 60 million people and provided support for more than 18 million counseling and testing sessions. In tandem with these bilateral programs, the United States has contributed about 30 percent of the funding for the Global Fund, which has become the leading contributor to programs fighting malaria and tuberculosis and the second largest funder of HIV programs worldwide. Unfortunately, the HIV/AIDS epidemic continues to spread, but in the last few years the United States has led the charge to try to fight the disease.

Private-Sector Involvement

Over and above these U.S. government contributions, American charitable groups, faith-based organizations, and individuals have a long history of providing support and assistance to organizations around the world. Many Americans feel most comfortable in channeling their assistance through private agencies, foundations, and churches. Catholic Relief Services, World Vision, CARE, the American Red Cross, Save the Children, Oxfam America, and many similar organizations have worked for decades to assist development efforts throughout the world. To offer but one example, Rotary International, with support from its members in the United States and around the world, has led the charge to eradicate polio.

The last decade has witnessed significant contributions from several new, innovative private foundations. U.S. foundations have combated poverty for many years — in the 1950s and 1960s, the Ford and Rockefeller foundations were among the largest assistance organizations in the world, and they continue to provide support today. But several new foundations have emerged on the scene in recent years. The largest by far is the Bill and Melinda Gates Foundation, which disburses more than $1.5 billion each year, more than the total amount of foreign assistance provided by many individual donor countries.

Other new foundations include the William and Flora Hewlett Foundation, the Omidyar Network, Google.org, the Nike Foundation, and Malaria No More. These organizations offer their own entrepreneurial spirit, technical know-how, and intense commitment to organizations and governments already working to solve some of the most pressing development challenges.

Facing Facts

Of course, U.S. foreign assistance programs are not above criticism. Many commentators acknowledge that the United States is the largest single donor, but they observe that as a share of total income, U.S. assistance lags behind that of other countries even after including private and charitable contributions. And U.S. government programs suffer from their share of bureaucratic delays and high administrative costs. These issues are beginning to be more widely addressed within the United States, and some important changes have been made. For example, U.S. government direct foreign assistance has increased by more than 150 percent since 1997. Some efforts have already been made to reduce bureaucratic costs, particularly through the MCC, and other reforms are under way.

Today, there is a renewed sense among many Americans of the urgent need to fight poverty, battle endemic diseases, and accelerate development among the poorest nations. The American people are engaged at many levels in meeting these challenges — through their government, private foundations, and faith-based groups, and as individual volunteers — in the hopes of fighting poverty and disease and creating a more open and prosperous world for all.

The opinions expressed in this article do not necessarily reflect the views or policies of the U.S. government.

(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)