Small Donors Show Up U.S. Aid
U.N. Report Highlights Efforts Relative to National Economies

By: Andres Oppenheimer

It doesn't look pretty: The United States ranks last among the world's 28 top foreign aid donor countries, and its foreign assistance levels have dropped dramatically over the past 10 years, according to a United Nations report released this week.

The United Nations Human Development Report 2002, a wide-ranging report that includes both fascinating country statistics and a questionable development ranking of 137 nations, puts the United States well below Denmark, the Netherlands, Japan, and even Spain and Portugal on the list of the biggest foreign aid donor countries relative to the size of their economies.

Granted, if you look at the actual dollar figures, the $9.9 billion annual U.S. foreign assistance ranks only second after Japan's $13.5 billion.

But when you look at countries' foreign aid relative to the size of their economies, the United States is devoting 0.1% of its gross national product (GNP) to help the world's poorest countries, less than any other industrialized nation.

By comparison, Denmark spends 1.06% of its GNP on foreign aid, the Netherlands 0.84%, Norway 0.80%, Germany 0.27%, Japan 0.28%, Portugal 0.26%, and Spain 0.22%. What's worse, U.S. foreign aid has by this measure been cut in half over the past 10 years.

Is this something we should care about? You bet. Until earlier this year, the decline in U.S. foreign aid was not seen as a catastrophe in Washington: Conservative Republicans had persuaded many moderates in Congress that foreign aid had for many years been wasted in handouts to corrupt foreign leaders who often stashed it in their Swiss bank accounts.

Not-So-Free Trade

Washington's line was that the United States could best help other countries through free trade: The mantra - backed by many developing countries - was "trade, not aid". But in recent months, the Bush administration has approved a scandalous farm subsidies bill, steel quotas, and other protectionist measures. Hence, U.S. foreign aid deserves to be reexamined with a new perspective because, as it stands, poor countries are getting neither enough aid nor enough free trade.

Bush administration officials say the U.N. report's way of measuring countries' generosity is arbitrary, and that many of the report's figures are outdated.

They say the United States provides significant military assistance to developing countries, which is not included in these figures, and allows other rich nations to look better in international aid charts. And they say that, in pure dollar terms, the United States is now the world's largest donor country, because Japan slipped to second place last year, and the U.N. report's latest data are from 2000.

Increase Proposed

In addition, President Bush announced at the U.N. anti-poverty summit last March in Monterrey, Mexico, that U.S. aid would include an additional $5 billion a year to the world's poorest countries over the next three years. Under Bush's proposal, this 50% increase in U.S. aid - which is subject to congressional approval - would be tied to "good governance" policies in recipient countries.

"We do not believe that this is the best way to measure foreign assistance", says Ed Fox, assistant administrator with the U.S. government's Agency for International Development (AID), referring to the U.N. report.

"And these statistics do not include the new [$5 billion a year] proposal that the President has put forward."

Short of the Need

Still, even the Bush-proposed increase in U.S. aid may be far short of what developing countries need.

"It's a step in the right direction", says Paul Segal, a U.N. economist who helped write the report, adding that the funds Bush proposed would increase U.S. foreign aid to about 0.15% of the country's GNP. "But even with the new aid, the United States will still be near the bottom of the ranking."

• Postscript: Regarding the U.N. Human Development Report's 137-country "human development index," which measures the progress of nations taking into account factors such as life expectancy and education levels, its results are somewhat questionable. As in last year's report, Norway is first on the list, followed by Sweden, Canada, Belgium, Australia and the United States. In Latin America, Argentina ranks as the most developed country (34th), followed by Chile (38th), Uruguay (40th), Costa Rica (43rd), Trinidad and Tobago (50th) Mexico (54th), Cuba (55th), Panama (57th) and Venezuela (69th).

  But many of the figures are outdated, or slanted. The annual per capita income of $12,377 for Argentina has been cut by more than half since the country went bankrupt six months ago, and Cuba conveniently did not report its per capita income, which economists agree is among the lowest in Latin America. The U.N. development index is a worthy effort, but I take it with a grain of salt.