Over the years, the foreign policy of the United States has come under intense scrutiny both at home and abroad. Seemingly endless wars, confusing political alliance choices, and the vast expenditures of money in projects all over the world have many people (understandably) questioning the value of these investments. The topic of foreign aid in particular generates strong backlash from many Americans. Most polls show that the majority of Americans believe that the United States is spending too much money on other nations. But polls also indicate that most Americans overestimate the amount of money actually spent. The topic of foreign aid has featured in presidential elections as well, with the current administration looking to dramatically cut this assistance. This week, we’ll set the record straight on American foreign aid and determine what Americans actually get for their investments.
So how much is actually given out in foreign aid every year? The current total is roughly around $50 billion per year, or a little more than one percent of the full federal budget. This is in comparison to about 18% that is spent on defense and 81% on other government services. The entire concept of providing foreign assistance (rather than direct loans) emerged out of the devastation of the First and Second World Wars. What initially started as interest free loans and donations of supplies to allies in the First World War became full-scale projects to arm and rebuild much of Western Europe at the beginning of the Cold War. The most well-known of these projects is the Marshall Plan. At the start of the Cold War, the United States determined that the economic success of allies such as Britain, France, and West Germany was vital to core American interests. As such, this program was designed to send billions of dollars to help rebuild the infrastructure and economies of these nations. But of course, there were a few strings attached.
For instance, recipient nations were required to maintain compliance with the newly passed Economic Cooperation Act and these funds were generally understood to be used to purchase American goods and services. The underlying assumption of this entire program (and subsequent aid programs) was that the recipient nation would remain allied with the United States (or at least work towards similar interests). By 1961, the continuing foreign aid programs led to the passage of the Foreign Assistance Act, helping pave the way for the creation of the United States Agency for International Development (USAID). This federal agency helps channel foreign aid spending to appropriate programs and coordinates with similar aid agencies from other nations. It is important to note that the United States is only one of many nations that engages in assistance programs outside its own borders.
Where does all this money go? A little under half goes to what are called “long-term development” programs. These are projects designed to support a developing nation’s economy, provide support for public health systems, and fund institutions like the World Bank. About a third goes to military assistance to help nations buy American-made military and security hardware. These funds also help nations engage in training exercises and fight global drug and terrorist networks. The rest is then spent on humanitarian and political aid projects. These can range from disaster relief programs to projects backing democracy promotion in previously authoritarian nations. In many cases, the relief programs also help subsidize foreign purchases of American produce and agricultural products.
Perhaps unsurprisingly, the majority of this aid is going to nations that have been ravaged by war and with which the United States would like to remain allies. These include Middle Eastern nations like Jordan, Iraq, Yemen, and the Palestinian Territories. But African nations also receive substantial investments as well due to ongoing economic and global health initiatives. Though most of America’s foreign aid does not go towards military purchases, that is a large contributing factor for nations like Israel and Egypt (whose yearly aid payments were part of the terms of their mutual peace treaty). But the underlying assumptions of these foreign aid distributions are the same as they were during the Marshall Plan. Nations in need of assistance receive funds for programs that are designed to work in their mutual shared interests with the United States.
It is also important to note, however, that it is not often the case where the United States is simply dropping pallets of American dollars onto wealthy dictators to buy their continued loyalty. Such a scenario drastically misrepresents the reality of American foreign aid. Instead, most of this money is channeled through non-governmental organizations (NGOs). These are predominately non-profit, international organizations that seek to implement solutions to global problems in accordance with their stated mission. Their missions can range from providing refugee resettlement, to protecting the victims of torture, to educating others about global issues. This list of NGOs (specific to Minnesota), shows the vast array of NGO strategies and missions. Though it is difficult to gather exact statistics, such programs are thought by many to have saved millions of lives and contributed to political stability in otherwise volatile regions.
So why does it benefit the United States and the average American? As we’ve mentioned a few times in this article, there are often conditions on much of this money where it can only be used to purchase goods and services from the United States. This helps maintain the economy and increase continued business ties between the United States and other developing markets. Economic and social development programs also help support allied nations to help make their governments more stable. Then there is the humanitarian relief factor. Though it isn’t entirely altruistic, the sight of the United States military handing out relief aid to disaster-stricken areas likely helps increase the positive image of America in the world. We already know that American military strikes on civilians contributes to a worsening attitude of the United States and is often used in terrorist propaganda and recruitment, so it stands to reason that the reverse can be true as well. Finally, there are benefits to programs like America’s medical relief response to prevent the spread of the West African Ebola outbreak. Many of these are difficult to see directly, but they all have a profound impact on American interests and global security at a relatively low cost (at least compared to direct military campaigns).
Moving forward, what should the future of foreign aid look like? There is certainly waste and abuse within the global foreign aid system. With nearly $50 billion moving around per year, some amount of impropriety is probably inevitable (and that’s just the American aid total). But does this mean the United States should scrap the majority of its programs? As the 2020 elections begin to heat up, the topic of foreign aid is sure to come up at some point. The most important thing you can do is to remain educated about the role of the United States in foreign assistance. The direct impacts of foreign aid to your individual life may seem small, but they can mean life or death to others throughout the world.