Foreign Aid: An Introduction to United States Programs and Policy

By Tarnoff, Curt; Lawson, Marian Leonardo | DISAM Journal, November 2009 | Go to article overview
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Foreign Aid: An Introduction to United States Programs and Policy


Tarnoff, Curt, Lawson, Marian Leonardo, DISAM Journal


[The following are excerpts of the report prepared for members and committees of Congress by the Congressional Research Service, 9 April 2009.]

Summary

Foreign assistance is a fundamental component of the international affairs budget and is viewed by many as an essential instrument of U.S. foreign policy. The focus of U.S. policy has been transformed since the terrorist attacks of September 11, 2001. This report provides an overview of the U.S. foreign aid program, by answering frequently asked questions on the subject.

There are five major categories of foreign assistance:

* Bilateral development aid

* Economic assistance supporting U.S. political and security goals

* Humanitarian aid

* Multilateral economic contributions

* Military aid

Due largely to the implementation of two new foreign aid initiatives, the Millennium Challenge Corporation and the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (HIV/AIDS) Initiative, bilateral development assistance has become the largest category of U.S. aid.

In fiscal year (FY) 2008, the United States provided some form of foreign assistance to about 154 countries. Israel and Egypt placed among the top recipients in FY 2008, as they have since the late 1970s, although on-going reconstruction activities in Iraq and Afghanistan now place those nations near the top as well. The impact of the terrorist attacks on September 11, 2001, and the subsequent use of foreign aid to support the war on terrorism are clearly seen in the estimated country-aid levels for FY 2008. Pakistan and Jordan are key partners in the war on terrorism and major beneficiaries of U.S. assistance. Also among the leading recipients are some African countries that are the focus of the multi-billion dollar HIV/AIDS initiative.

By nearly all measures, the amount of foreign aid provided by the U.S. declined for several decades but has grown in the past few years. After hitting an all-time low in the mid-1990s, foreign assistance levels since FY 2004, in real terms, have been higher than any period since the early 1950s, largely due to Iraq and Afghanistan reconstruction and HIV/AIDS funding. The 0.19 percent of U.S. gross national product represented by foreign aid obligations for FY 2008 is consistent with recent years, but quite low compared to the early decades of the foreign assistance program. The U.S. is the largest international economic aid donor in absolute dollar terms but is the smallest contributor among the major donor governments when calculated as a percent of gross national income.

Foreign Aid: An Introduction to U.S. Programs and Policy

U.S. foreign aid is a fundamental component of the international affairs budget and is viewed by many as an essential instrument of U.S. foreign policy. (1) Each year, it is the subject of extensive congressional debate and legislative and executive branch initiatives, proposing changes in the size, composition, and purpose of the program. The focus of U.S. foreign aid policy has been transformed since the terrorist attacks of September 11, 2001. In 2002, a national security strategy for the first time established global development as a third pillar of U.S. national security, along with defense and diplomacy.

This report addresses a number of the more frequently asked queries regarding the U.S. foreign aid program, its objectives, costs, organization, the role of Congress, and how it compares to those of other aid donors. In particular, the discussion attempts not only to present a current snapshot of American foreign assistance, but also to illustrate the extent to which this instrument of U.S. foreign policy has changed from past practices, especially since the end of the Cold War and the launching of the war on terror.

Data presented in the report are the most current, reliable figures available, usually covering the period through FY 2008.

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