Foreign Aid Cuts Could Hit Close to Home : Assistance: U.S. Agency for International Development says Southland companies working on overseas projects will be affected if measure is approved.

U.S. foreign aid goes to places such as Venezuela, not Valencia; Lithuania, not Lancaster; Pakistan, not Pasadena. Or at least that’s what most people think.

With Congress approving massive cuts in the country’s foreign assistance program, backers of the U.S. largess are attempting to correct what they call a common misunderstanding: that foreign aid benefits far-flung lands with no direct effect back home.

In fact, the U.S. Agency for International Development, which handles foreign development assistance, doles out nearly 80% of its contracts and grants to U.S. firms--which in turn provide the food, supplies or assistance to recipient nations overseas.

That means that the significant cuts in foreign aid approved by the House and Senate earlier this year could hit closer to home than most people think, resulting in less business for U.S. companies and possibly even fewer jobs, officials say.

In the Los Angeles area, for instance, there are contractors building houses in Russia, providing health education in El Salvador, improving water and waste water facilities in Egypt and upgrading government computer systems throughout the world--all funded by U.S. foreign aid.

A West Los Angeles company is using foreign assistance money to provide emergency health care in Rwanda, Sudan, Somalia and Bosnia. And Santa Monica’s RAND Corp. is in the midst of a government-funded project to collect demographic data in Indonesia.

“We have a Congress full of a lot of people who don’t want to even hear the words foreign assistance ,” said Jay Byrne, a spokesman for the agency. “When they say foreign aid is money going down a rat hole, the fact is that that rat hole could be their district.”

Byrne was referring to the comments of U.S. Sen. Jesse Helms (R-N.C.), one of the foremost critics of foreign aid. As chairman of the Senate Foreign Relations Committee, Helms has said that one of his priorities this year will be to save tax dollars from being poured down “foreign rat holes.”

The House and Senate have approved significant cuts in foreign aid, particularly to Africa and the former Soviet Union. The House bill would cut $2.8 billion from a $21.6-billion foreign affairs budget that Secretary of State Warren Christopher has said is already at “rock-bottom.” It would abolish the Agency for International Development and two other agencies outright, merging them with the State Department, and it would reduce funding by more than 50% to the International Development Assn., the World Bank affiliate that provides loans to poor nations.

The Senate has approved similar cuts, and legislators from the two chambers are negotiating to work out differences. President Clinton has threatened to veto the bills because of the controversial consolidations into the State Department of the Agency for International Development, the United States Information Agency and the Arms Control and Disarmament Agency.

Currently, U.S. foreign aid represents about 0.7% of the federal budget. The United States ranks second after Japan in the expenditure of total dollars for foreign aid, but last among the 21 industrialized donor nations in the proportion of its gross national product allocated for it.

With the reductions in aid looming, the Agency for International Development has sent letters to contractors preparing them for fewer jobs in the future.

DevTech Migrations of Valencia, fortunately, just completed a major project upgrading the computer systems at the Agency for International Development’s worldwide network of missions. Even before the budget cuts, the company was not counting on much more foreign work, said Ed Offstein, vice president of sales and marketing.

The Parsons Corp. in Pasadena is building 2,500 housing units throughout Russia designed for demobilized Russian soldiers returning from the Baltics and other regions. Company officials express optimism that they will be selected to work on some of the projects that continue to receive funding.

“While it’s true that USAID projects have benefited both foreign countries and U.S. companies such as Parsons, it also is clear that, in these times of shrinking budgets and limited resources, only cost-efficient projects which provide the most good for the most people should be considered,” said Ralph DiSibio, Parsons’ senior vice president.

The budget cuts could actually improve business for the International Medical Corps, but officials at the West Los Angeles nonprofit organization say that in their line of work, that is grim news.

“Our concern is that we’re going to be deploying more and more of our staff to more and more disasters,” said Stephen Tomlin, the organization’s vice president for international operations. “The reduction of aid is going to impact development in Southern Hemisphere countries and the very fragile infrastructures are going to disintegrate. We think the budget cuts are extremely shortsighted.”

Now, doctors deployed to crisis situations spend a portion of their time training local medical personnel to continue the work once aid money dries up. Such training will probably be reduced in favor of more direct health care, Tomlin predicts.

International Medical Corps doctors also expect fewer contracts like the one they recently received in Burundi, designed to help keep the health care system there from collapsing. Future grants will probably bring in the doctors after the collapse, Tomlin said.

“It will be going in after a full-blown disaster with a Band-Aid,” he said. “There will not be the money for preparedness, for prevention or for mitigation.”

Besides the grants to companies, foreign assistance also goes in bundles to California farmers. In 1994, the Agency for International Development purchased $23.9 million in vegetables, rice and wheat in the state for food aid programs. In 1993, the California agriculture purchases totaled $51.4 million.

To ship the food, the federal government has also relied heavily on California ports and shippers, spending $8.8 million in 1993 and $41.7 million in 1994, according to the agency.

A report released last week by a coalition of groups backing foreign aid said some of the strongest congressional critics of overseas assistance receive billions of dollars in jobs in their districts. Helms’s state, for instance, received more than $18 million since 1992, while Sen. Phil Gramm’s home state of Texas has received more than $1 billion.

Despite the hometown connections, legislators who supported the cutbacks in foreign assistance say sending so much money overseas makes less sense at a time of deep domestic budget cuts.

“There is no question that building alliances with other countries is helpful,” said Rep. Elton Gallegly (R-Simi Valley), a member of the House International Relations Committee. “But that doesn’t mean we have an open checkbook. . . . If we can’t cut there, where can we cut?”

Rep. Howard L. Berman (D-Panorama City), another International Relations Committee member, considers such a view shortsighted.

“It’s very easy to bash foreign aid,” said Berman, who has been one of the leading Democratic backers of foreign assistance. “It’s very easy to mislead the people on how much we spend on foreign aid. The temptation to go back to a ‘fortress America’ is appealing. . . . But any student of history has to acknowledge that it makes sense for the U.S. to stay involved in the world.”

Berman has a single foreign aid recipient in his district--Marvin Dreyer, a North Hollywood contractor who is providing health and education training in El Salvador.

For Dreyer, it is the humanitarian aspect of the work that makes it worthwhile. But he says his North Hollywood neighbors benefit along with the people of El Salvador.

“Foreign dollars have an impact on Central America becoming self-sufficient,” he said in an interview. “It helps to avoid the vast influx of refugees into the United States.”

Berman acknowledges that public sentiment is strongly against foreign assistance. But he says that when people discover that such aid makes up less than 1% of the federal budget, and when they learn how foreign aid helps areas far closer than Kazakhstan or Mozambique, support begins to grow.

Citing the case of South Korea, which was once a large recipient of foreign aid and is now a significant market for U.S. goods, Berman said foreign aid helps U.S. businesses overseas.

“There is economic self-interest to foreign aid,” he said. “This money makes sense.”