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
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