Hold Firm on Foreign Aid the House Shortchanged Developing Countries When It Cut $200 Million in Funding
Catherine Gwin. Catherine Gwin is vice president of the Overseas Development Council, a. Washington-based research institute., The Christian Science Monitor
ON June 17, the House of Representatives passed the foreign aid appropriations bill. But it seriously shortchanged developing countries by cutting over $200 million in funding for the International Development Association (IDA). As the "soft loan" window of the World Bank, IDA is the largest source of low-cost development lending to the world's poorest countries. The United States' negotiated share of this three-year IDA replenishment is just under $4 billion, or 20 percent of the total contribution from 34 donor countries.
At a time of budget tightening, spending cuts in foreign as well as domestic programs are unavoidable. However, the steepness of recent foreign-aid cuts partially reflects congressional efforts to meet President Clinton's new commitment of $1.8 billion in aid for Russia. This approach runs the risk of robbing Peter to pay Paul and contradicts the principle at the core of the administration's deficit reduction package: The poor should not bear the burden of adjustment.
The IDA funding request comes before Congress at a time of new and urgent needs for foreign assistance to support the historic transformation in Eastern Europe and the former Soviet Union, encourage the worldwide movement toward democracy, and reverse accelerating trends in global environmental degradation.
These needs must compete for attention and funds with long-neglected domestic problems, including efforts to rein in the budget deficit and national debt.
The issue raises two questions: Why continue to aid the world's poor when the cold war is over and we are faced with raising taxes and cutting spending? And, if we do so, why channel a portion of those funds through IDA?
We have won the cold war, but we have not secured the peace. Nor does making peace resolve many other international problems that, if left unattended, threaten our well-being and the future well-being of our children and grandchildren. These problems - illicit drugs and terrorism, disease, the proliferation of weapons of mass destruction in regions of insecurity, the press of population growth on the earth's natural resources - will not be resolved in a world marked by massive poverty, social and economic inequities, and ethnic conflict.
While the crisis caused by such unresolved problems will entail substantial costs, the peaceful economic development of poor countries can work to our benefit in very tangible ways. Indeed, in recent years, US exports to developing countries have increased 62 percent as compared to a 31 percent rise in US exports to industrialized countries. These growing markets for US goods are found in former borrowing countries, some of which are IDA "graduates. …