The Future of U.S. Foreign Aid

The origins of U.S. foreign aid programs can be traced back to the Marshall Plan, which was instituted in 1948 to rebuild shattered European economies and avert an acute humanitarian crisis. By the time it had ended, Western European economies had undergone a dramatic turnaround—from devastation to postwar boom. The program also created prosperity at home by creating demand for producers in the U.S. and allowing European consumers to buy American exports. The benefits were not only economic in nature—the U.S. also generated goodwill with its former enemies Germany and Italy, which decreased communist influence and forged alliances that exist to this day. In short, the Marshall Plan was the first large-scale experiment in foreign aid conducted by the U.S., and it proved to be enormously successful.

This early success paved the way for the creation of the United States Agency for International Development (USAID) in 1961. During the Cold War, U.S. aid was directed toward nations like Israel, South Korea, Taiwan, Brazil, and Chile. Similar in function to the Marshall Plan’s programs, USAID facilitated economic development and eased humanitarian crises around the world. It also served U.S. interests by combating communist influences and creating commercial and military alliances that continue to benefit the nation today.

However, it was during this time period that U.S. foreign aid began to decline from taking up around 0.6 percent of its annual GDP to its current level of 0.18 percent. This is lower than that of most other Western countries. It is also far below the target of the United Nations, which concerns foreign aid taking up 0.7 percent of the annual GDP. That is a shame. In the face of massive humanitarian crises, the spread of terror, and rising Chinese global influences, U.S. foreign aid is now needed more than ever.

In an address at the United Nations in 2015, Secretary-General Ban Ki-Moon stated that “The number of people in need of humanitarian assistance around the world has doubled in just 10 years.” Every year, around 1.5 million children below the age of five die from diseases that vaccines can prevent. Conflicts in Yemen, Syria, Congo, and elsewhere have created famines and the greatest refugee crisis since 1945. In light of these events, the U.S. has a responsibility to alleviate humanitarian suffering wherever it can.

Current U.S. programs have been enormously successful in alleviating humanitarian crises. For instance, the President’s Emergency Plan for AIDS Relief (PEPFAR) program to stop the spread of the AIDS epidemic in Africa saved at least five million lives since 2003. Basic medical supplies like vaccines have also decreased child mortality rates and increased life expectancy rates—all at very low costs. If we increase spending on humanitarian assistance, many more lives can be saved.

U.S. assistance also goes toward stabilizing other countries that are in danger of disintegrating into conflict and civil war. Since the outbreak of civil war in Syria in 2011, millions of refugees have fled the country. Terror groups have become increasingly powerful and numerous, leading to a number of terrorist attacks both within Syria and in other countries like the U.S. In an open letter written to U.S. political leaders concerning the proposed cuts, a group of nearly 120 U.S. generals wrote that fighting terrorism required fighting against “drivers of extremism—lack of opportunity, insecurity, injustice, and hopelessness.”

In the modern world, foreign aid improves opinions of the U.S., which helps shore up alliances and friendships overseas. For instance, after the U.S. provided substantial disaster relief aid to Indonesia in 2004, 79 percent of Indonesians said that they had improved their opinions of America. In a world where developing nations constitute an increasing percentage of the global population and economic power, it is important for the U.S. to maintain strong relationships with other countries. The portion that developing nations contribute to the global GDP has grown from about 20 percent in 1965 to 50 percent today. If the U.S. wants to retain a position of global leadership, it will have to do so by building partnerships with other countries.

Aid and investment also helps to counter the influence of powerful nations like China. President Donald Trump seems to have acknowledged the importance of aid in this regard. Last year, he signed into law the bipartisan Better Utilization of Investments Leading to Development (BUILD) Act. In the words of Vice President Mike Pence, the program is intended to facilitate and fund investment in other nations. It serves the purpose of “seeking collaboration and not control,” said Pence, who is referencing China’s Belt and Road Initiative. The China’s Belt and Road Initiative has been accused of luring countries into debt traps.

Foreign aid clearly benefits both the U.S. and other countries. But over the years, many have voiced concerns that foreign aid money is spent ineffectively and funnelled into corrupt governments that misuse the funds. However, partially for that very reason, 85 percent of aid is administered either to institutions based in the U.S. or directly to non-government organizations. Furthermore, the use of funds that are given to governments is strictly monitored. Though exact numbers are unavailable for obvious reasons, evidence suggests that almost all aid given is used for its intended purpose. A investigation conducted by Congress on aid given to Iraq, for instance, found that 91 to 95 percent of aid was used properly. We can reasonably assume that most foreign aid programs would involve less corruption than one administered in a recently invaded country.

Considering the enormous benefits that aid has for both other countries and the U.S., the U.S. needs to prioritize its investments in foreign aid. Eventually, it should aim to fulfill the United Nations’ target of spending 0.7 percent of the annual GDP on foreign aid. This will save lives, increase prosperity both at home and abroad, and contribute to the creation of a brighter future for all.