FPI Analysis: Foreign Aid Advances U.S. Security, Prosperity, and Global Leadership

February 25, 2013

“What they can do because of our assistance, we don’t have to do.  And we should never forget that we aren’t buying friends; we’re helping friends.  We’re helping them open the roads of enterprise and opportunity for their own people, helping them build their own institutions of pluralism and democracy, and helping them defend themselves.”

—President Ronald Reagan

For decades—from the Marshall Plan that helped to reshape war-torn Europe into a democratic bulwark against the forces of tyranny, to today’s Millennium Challenge Corporation that promotes both development and accountability—the United States has used foreign aid to advance the nation’s security, prosperity, and global leadership.  What’s more, civilian foreign assistance currently consumes only a tiny portion of the federal budget, accounting for roughly 1 percent of total U.S. government spending in fiscal year 2013.

However, U.S. foreign aid faces an uncertain future.  Unless the President and Congress avert the looming sequester, America’s budget for international affairs—a major component of which is civilian foreign assistance—will be slashed across-the-board by as much as 5.3 percent in FY 2013, and by as much as $50 billion over the next decade.  In addition, some lawmakers have even proposed eliminating development programs, a move that would harm U.S. interests without making a dent in budget deficits.

Foreign aid—along with diplomacy, trade, intelligence, national defense, and other tools of statecraft—plays an indispensible role in furthering America’s strategic, economic, and moral objectives throughout the world.  If the United States is to remain a global leader in the 21st century, then it is critical that the President and Congress work to sustain investments in civilian foreign assistance commensurate to America’s interests and values.

Foreign Aid’s Strategic, Economic, and Moral Imperatives

America’s commitment to foreign aid reflects not only the nation’s moral character, but also its economic and strategic interests.  As a result, U.S. foreign assistance has enjoyed a long history of strong bipartisan support.  As then-Secretary of State Condoleezza Rice explained in October 2008:  “For the United States, supporting international development is more than just an expression of our compassion.  It is a vital investment in the free, prosperous, and peaceful international order that fundamentally serves our national interest.”

First, foreign aid promotes national security by helping to fight the causes of terrorism, stabilize weak states, and promote regional-level security and global stability.  To take a key example, foreign assistance is playing a crucial role in America’s larger struggle to combat conditions that can spawn terrorism—namely, poverty, weak institutions, and corruption—by promoting economic development, good governance, and transparency in the Middle East and South Asia.  General John Allen, until recently Commander of U.S. Forces in Afghanistan, made this very point in support of development in April 2011 when he was Deputy Commander of U.S. Central Command (CENTCOM), the combatant command that plans and conducts military operations in the Middle East and South Asia:

“There are adversaries in the CENTCOM region who understand and respect American hard power, but they genuinely fear American soft power frequently wielded in the form of USAID projects.  While the hard power of the military can create trade, space, time, and a viable security environment, the soft power of USAID and the development community can deliver strategic effects and outcomes for decades, affecting generations.  Ensuring our American development community is properly resourced is an investment in the future to create the strategic conditions we seek to sustain stability and economic development in CENTCOM’s region.”

Second, foreign aid promotes prosperity and self-reliance by encouraging economic development and private enterprise in aid-recipient countries, as well as opening and developing international markets for the United States. 

For example, after the Korean War ended in 1953, the United States made a strategic decision to use foreign assistance and other tools to help rebuild, over time, South Korea’s economy, military, and political institutions.  Today, Seoul is now not only a vibrant democracy and one of Washington’s most important allies in the Asia-Pacific, but also a significant donor of foreign aid.  What’s more, South Korea is today America’s seventh largest trading partner, with a free-trade agreement with the United States that entered into force in March 2012, and is projected to expand America’s annual exports by roughly $10 billion, add 70,000 U.S. jobs, and grow America’s gross domestic product (GDP) by as much as $11 billion.

Similarly, Colombia’s remarkable transformation illustrates the positive role foreign assistance can play in support of key U.S. friends and allies.  In 2001, Colombia was on the verge of collapse in the face of a powerful narco-insurgency.  Today, with the help of nearly $8.6 billion in U.S. economic and military aid, the threat from narco-terrorist groups has diminished, and Colombia’s democracy now is thriving.  What’s more, U.S. trade in goods with Colombia has tripled since 2000 to $12 billion in 2011, and is set to grow further now that the U.S.-Colombia free-trade agreement has entered into force.

Critics often fail to appreciate how U.S. foreign aid can help to create opportunities for American companies and exports by opening markets and encouraging economic liberalization.  As then-Secretary of State Hillary Clinton elaborated in July 2011:

“The 1 percent of our budget we spend on all diplomacy and development is not what is driving our deficit.  Not only can we afford to maintain a strong civilian presence; we cannot afford not to.  The simple truth is if we don’t seize the opportunities available today, other countries will. Other countries will fight for their companies while ours fend for themselves.  Other countries will promote their own models and serve their own interests instead of opening markets, reinforcing the rule of law, and creating widespread inclusive growth.  Other countries will create the jobs that should be created here, and even claim the mantle of global leadership.  None of us want to see that happen, and I don’t believe most of the people around the world do either.”

Third, foreign assistance advances America’s moral values and humanitarian interests by saving lives, fighting poverty and hunger, combating infectious diseases like HIV/AIDS, promoting education, and bolstering democratic institutions.  For example, President George W. Bush launched the President’s Emergency Plan for AIDS Relief (PEPFAR) in 2003 to battle the spread of HIV/AIDS in Africa.  In conjunction with the Global Fund to Fight AIDS, Malaria, and Tuberculosis, PEPFAR has achieved real and objective results.  As President Bush recounted in December 2010:

“In this crisis, we needed not only more resources but also to use them differently.  So we put in place a unified command structure; set clear, ambitious, measurable goals; insisted on accountability; and made sure that host governments took leadership and responsibility.  The results came more quickly than many of us expected. Early in 2003, there were perhaps 50,000 people in sub-Saharan Africa on AIDS treatment.  Today, thanks to America, other donor nations and the tireless work of Africans themselves, nearly 4 million are.  Fragile nations have been stabilized, making progress possible in other areas of development.”

Thus, foreign aid—properly understood—is neither national bribery nor altruistic charity, but rather strategic investment.  As Paul D. Miller, a former Director for Afghanistan in the National Security Council under Presidents Bush and Obama who earlier served as an Army reservist in Afghanistan, wrote in January 2011: 

“Foreign aid helps countries whose interests align with our own increase their capacities.  The United States gives money to help select countries—not the entire world—improve specific abilities, like their ability to provide public security, defend their borders, or buy and sell goods....  Aid is hard power.  It is a weapon the United States uses to strengthen allies [and partners] and, thus, ourselves.”

Continuing Efforts to Make Foreign Aid More Effective and Accountable

Make no mistake:  the goal of results-driven foreign assistance is to help America’s partners become self-reliant.  Towards that end, the United States is working to provide foreign aid in ways that are more transparent, accountable, and more effective.   While it is true that certain development programs faced challenges in the past, over the last decade Washington has increasingly embraced new—and arguably revolutionary—approaches to foreign aid reform.  Today, new and innovative programs are using measurable and verifiable metrics to ensure development funds are received and effectively used by the projects and people they were intended to assist.

The Millennium Challenge Corporation (MCC) provides a powerful example of an innovative approach to foreign assistance.  Established under the Bush administration in 2004, the MCC only forms partnerships with nations that objectively meet 20 critical criteria and standards, broadly grouped into three categories: commitment to good governance, economic freedom, and investments in their citizens.  Moreover, MCC posts all assessment reports, program expenditures, and selection criterions online, with the explicit aim of maximizing public scrutiny and program understanding.  The MCC’s focus on results and accountability not only encourages partner countries to take ownership of projects, but also to work with the United States to achieve mutually beneficial, long-lasting development goals.

Successful transparency and accountability efforts can still be expanded across all foreign assistance programs.  Legislation such as the Foreign Aid Transparency and Accountability Act of 2012 (H.R. 3159), originally introduced by Congressman Ted Poe (R-TX) and later passed by the House of Representatives in December 2012, would expand innovative performance metrics and evaluations to all U.S. foreign assistance programs.

Still, some politicians continue to opportunistically target these programs for deep reductions or outright elimination, with seemingly little regard for the consequences of their proposals.  Eliminating foreign assistance to troubled states—such as Egypt, Libya, and Pakistan—would be counterproductive and would cripple America’s ability to shape and influence the choices of these emerging governments.  Our assistance to these countries should be packaged in order to promote a successful transition to democracy and build appropriate capabilities, but we should not undermine our own influence by turning away from these relationships.

Nor would eliminating foreign assistance solve America’s fiscal imbalances.  Rather, it would severely restrict America’s ability to respond to global security challenges and events. As Senator Marco Rubio (R-FL) said at the Foreign Policy Initiative’s 2011 Forum in Washington, D.C.:

“… there’s this urban legend out there that somehow, if we just eliminated foreign aid, we’d have all the money we need to wipe out our debt.  Foreign aid is very small.  It’s a significant number of dollars, no doubt about it, and one dollar of waste is too much.  But if you wiped out all the foreign aid in the world, you wouldn’t notice it in terms of the debt conversation.”

It is no wonder America’s national security leaders have urged the Executive Branch and Congress to find a way forward to rein in the federal deficit without undermining statecraft tools like development.  Of note, even though Secretary of Defense Leon Panetta is responsible for America’s military, he nevertheless made it a point to defend foreign assistance during a February 2012 hearing before the House Budget Committee:

“Strong national security is dependent on having a strong diplomatic arm, a strong development arm, a strong intelligence arm, a strong capability to try to have strong economies in the world.  I mean, all of this is related to our national security.  And I think if any one of these areas suffers cuts above and beyond others it’s going to damage our security just by virtue of the kind of broad approach we need to have to be—to maintain the leadership position we have in the world.”


“No nation can solve all the problems of the world.  But a nation that believes human dignity is universal—that affirms that all men and women are created equal—will do what it can.  In the U.S., foreign humanitarian assistance, including AIDS relief, represents less than 1% of our federal budget.  It is not the cause of our fiscal problems.  Reducing our commitment would only succeed in increasing the sum of suffering....  There is no effective way to oppose the enemies of freedom without also opposing the shared enemies of humankind—disease and poverty.”

—President George W. Bush

Over the past decade, the United States has ushered in a new era of foreign assistance.  With the creation of innovative and more effective programs like the Millennium Challenge Corporation, the United States is taking strides to make foreign assistance more transparent, accountable, and effective.  As a result, civilian foreign assistance programs are playing a renewed and revitalized role in advancing the nation’s security, prosperity, and global leadership. 

While U.S. lawmakers must examine every dollar spent by the federal government to ensure that it is used judiciously and well, and begin to make the tough political decisions necessary for fixing our fiscal woes, they should recognize that the returns from the nation’s foreign assistance programs are far more than their costs.

Mission Statement

The Foreign Policy Initiative seeks to promote an active U.S. foreign policy committed to robust support for democratic allies, human rights, a strong American military equipped to meet the challenges of the 21st century, and strengthening America’s global economic competitiveness.
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