The More Things Change: Foreign Aid Budget Looks like a Retread from the Cold War

By Lobe, Jim | Foreign Policy in Focus, March 8, 2004 | Go to article overview

The More Things Change: Foreign Aid Budget Looks like a Retread from the Cold War


Lobe, Jim, Foreign Policy in Focus


February 19, 2004

If the "war on terror" is beginning to look increasingly like the cold war, then President George W. Bush's fiscal year (FY) 2005 foreign-aid request will not change that impression.

While Bush is proposing to increase funding for his two key anti-poverty initiatives, the Millennium Challenge Account (MCA) and anti-AIDS money for African and Caribbean countries, he is also cutting funds for other key humanitarian and development accounts. At the same time, the president is asking Congress to increase by more than one billion dollars military and security assistance, particularly to key "front-line" states in the "war on terror". Those two categories, which include anti-drug aid and proliferation categories, would make up nearly one-third of all U.S. foreign aid under Bush's request, roughly the same percentage of total foreign aid when the cold war reached its height during the 1980s.

Under Bush's proposals, credits for foreign militaries to buy U.S. weapons and equipment would increase by some $700 million to nearly $five billion, the highest total in well over a decade. Even including the military credits, the total foreign aid proposal, which is included in a record federal budget request of some $2.4 trillion, amounts to a mere five percent of what Bush is requesting for the Pentagon next year.

Under his plan, military spending--which already constitutes roughly one-half of the world's total military expenditures--would rise by some seven percent, to $402 billion in FY 2005, which begins Oct. 1. That figure does not include an anticipated $50 billion more that the administration is expected to request to fund military and related operations in Iraq and Afghanistan later in the year.

The total budget request now goes to Congress, where even members of Bush's own Republican Party say he is unlikely to get everything he wants in view of the record budget deficits being forecast well into the future as a result of the president's tax cuts and military spending hikes.

Deficits and Spending

The projected deficit for FY 2005 now stands at some $521 billion, an amount that makes even the free-spending Ronald Reagan look like Charles Dickens' Ebenezer Scrooge. So great is the deficit--and the accumulating debt--that even the normally deferential International Monetary Fund warned recently the United States is approaching a fiscal crisis that threatens global financial stability.

To accommodate the big increases in defense and homeland security, the overall budget proposes significant cuts to agriculture, transportation and environmental protection, among other non-security-related items.

Bush's foreign-aid plan actually marks an increase over 2004 levels, although much of the additional money is explained by greater spending on security for U.S. embassies and personnel overseas.

As in previous years, Israel and Egypt are the biggest bilateral recipients under the request, accounting for nearly five billion dollars in aid between them. Of the nearly three billion dollars earmarked for Israel, most is for military credits. But other countries, particularly those--like Turkey, Jordan, Pakistan, Indonesia, and the Philippines-considered critical in the "war on terror," will also see significant increases in credits and aid, some of it from the Economic Support Fund (ESF)--a category of security assistance used during the cold war to give support to key geo-political allies.

ESF, which fell sharply in the 1990s, will increase by some $400 million over last year's level, or more than 20 percent, to more than $2.5 billion if Bush's proposal is approved. Pakistan will get nearly $700 million under the plan, while Jordan will get $459 million. Aid to Afghanistan, which is scheduled to hold elections for the first time in June despite a year-long resurgence of the former Taliban regime, is slated at $1.2 billion. …

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