Foreign Aid Hits Lowest Level in Two Decades : Other rich nations follow U.S. in cutting back while poverty spreads, world surveys show.


In a time of mounting economic and humanitarian challenges, help for the world’s poorest countries is steadily decreasing as rich nations follow the United States’ lead in cutting back on foreign aid.

In real terms, economic and humanitarian foreign aid has fallen to its lowest level in two decades.

Half of the wealthiest states cut their aid programs by more than a third between 1993 and 1994, according to the latest report by the Organization of Economic Cooperation and Development, or OECD, which tracks the budgets of 24 major industrialized nations.


Among them were major donors such as Sweden and Germany, which both cut their funding by about 7%, Belgium by 20%, Finland 27% and Italy 35%. Others decreasing their aid contributions included Austria, Canada, Holland and Portugal.

“Over the years, we’ve had great success in convincing other nations that giving more aid was in their enlightened self-interest. In the early 1970s, the United States provided 37% of foreign aid worldwide,” said Brian Atwood, director of the Agency for International Development, the U.S. government’s major distributor of developmental aid. “By the early 1990s, [the U.S. share] was down to 18% because other nations were giving more. But as we are cutting back, they are following suit.”

Foreign aid for fiscal 1995 totals $14.4 billion, of which $5.7 billion is military aid, almost exclusively to Israel and Egypt. The rest includes $4.68 billion in developmental or economic aid, which includes $2.3 billion in multilateral aid through the United Nations and the rest in funds administered by the U.S. Agency for International Development and some small private agencies’ $1.2 billion to newly independent states (Russia and other countries of the former Soviet Union), and $1.9 billion in humanitarian aid, mainly food and refugee assistance.

The foreign aid authorization bill that was passed by the House last week calls for sharp reductions in funds for education, environmental protection, family planning and health programs in developing countries. Aid proponents were quick to see disaster in the trend.

The authorized 35% cuts “would likely result in a tidal wave of human misery that puts millions of lives at risk,” said Julia Taft, president of InterAction, a coalition of relief, development and refugee-assistance agencies.

The turning point was 1993, when foreign aid by the world’s wealthiest countries declined by almost 6% in real terms, accounting for inflation.


In 1994, aid dispensed by 21 countries--including the United States, Canada, Japan, Australia, New Zealand and the Western European countries---dropped another 2%, the OECD said.

And with budgets squeezed around the world, the trend toward curtailing aid may not have bottomed out.

Budget constraints and pursuit of new trade and strategic alliances “put in doubt the commitment of the world’s richest countries to development aid,” says “The Reality of Aid,” a report being released this week by a network of international relief agencies. The study was funded by the Ford Foundation.

“The era of gradually growing assistance for the poor seems to have come to an end,” the study concludes.

Canadian aid, for instance, will decline by 15% in 1995-96 and by 21% by 1997-98, while other countries plan further steep cuts of between 10% and 20%, the study notes. Italian aid in 1995 is 60% below its 1992 level.

Even those nations not planning more cuts show no signs of reversing the trend and authorizing increases in foreign aid.


Sweden’s Cabinet decided in March, for example, to freeze aid at the current level until after 1998. Because of shrinking resources, Sweden’s foreign aid minister said, Stockholm will concentrate its aid on fewer countries in the future.

At the same time, the number of poor around the world has soared to 1.3 billion, about one out of every five, according to the U.N. Development Program. The total is expected to increase to 1.5 billion within the next five years.

The widening gap between the demands on aid and the limited supply is reflected in assistance for emergency food and refugee programs worldwide.

In 1989, 20% of needs went unmet. In 1994, over half the needs were unmet, AID reports.

“Will we begin to fall back in winning the war that we’re winning in areas such as the eradication of polio and measles?” asked UNICEF’s executive director, Carol Bellamy, after the release of its 1995 annual report last week.

The basic problem, some analysts say, is that other donor states find it increasingly difficult to justify paying more proportionately, a greater share of their national budgets, than the United States, the world’s richest nation, is willing to shoulder.

As a percentage of its gross national product, the measure of its economy, the United States now is the lowest aid contributor of the top 21 industrialized nations


The UNICEF target is for donor states to provide less than 1%--just 0.70%--of GNP. The United States gives 0.15%, in contrast with the 0.30% average among the other 20 top donors.

Washington cut back overall foreign aid by about 5% in 1994. Those cutbacks affected bilateral aid to countries such as Israel and Egypt, the longtime top recipients; emergency relief to crises areas such as Somalia and Rwanda, and multilateral assistance through institutions such as the World Bank.

Cuts in bilateral development programs since 1992, the last year of the Bush Administration, through fiscal 1995 total almost 20%, according to AID officials. AID funds often have the most direct effect on the poor abroad.

And a majority in Congress is now backing the House-approved 35% cut in bilateral aid for fiscal 1996.

In an overview of aid, the OECD charged that “this seeming withdrawal from traditional leadership is so grave that it poses a risk of undermining political support for development cooperation” by other contributors.

Perhaps ironically, the new reports coincide with a new study that finds “a strong majority” of Americans favor either maintaining or increasing U.S. foreign aid.


And a strong majority would also be willing to pay more taxes if they believed that more aid would get to the people who need it.

In a post-Cold War world, the U.S. public appears to want greater emphasis on helping the poor and less on securing strategic allies and military bases abroad.

The study, conducted by the Center for the Study of Policy Attitudes at the University of Maryland, concluded that “an overwhelming majority rejects the idea that the United States should only give when it promotes the U.S. national interest.”


U.S. Foreign Aid, 1947-94

The modern U.S. foreign aid program began with the 1947 Marshall Plan, which helped rebuild Western Europe after World War II. Aid levels fell sharply as Europe stabilized. Then, during the 1960s and 1970s, America expanded aid to allies in the Middle East and Asia. In the 1980s, with the decline of the Soviet threat, aid levels fell off again.

Source: U.S. Agency for International Development


Giving Till It Hurts

Overall, the United States ranks second in giving among advanced nations, but lowest in relation to gross national product.

Sources: Development Assistance Committee Report; Organization for Economic Cooperation and Development