Foreign Aid's Impact Is Felt Close to Home


U.S. foreign aid goes to places like 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 close to 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 fewer jobs, officials say.

From the San Fernando Valley and other local areas, there are contractors building houses in Russia, providing health education in El Salvador, improving the water in Egypt and upgrading government computer systems throughout the world--all funded by U.S. foreign aid.

A West Los Angeles firm, meanwhile, 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 for International Development. "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 the chairman of the Senate Foreign Relations Committee, Helms has said that one of his priorities this year will be to save taxpayer dollars from being poured down "foreign rat holes."


Both 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 USAID 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 lawmakers from the two chambers are negotiating to work out differences. President Clinton, meanwhile, has threatened to veto the bills because of the controversial consolidations of USAID, the United States Information Agency and the Arms Control and Disarmament Agency into the State Department.

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

With the reductions looming, the USAID has sent letters to contractors preparing them for fewer contracts in the future.

DevTech Migrations of Valencia, fortunately, just completed a major project upgrading the computer systems at USAID'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 soldiers returning from the Baltics and other regions. Company officials express optimism that they will be selected for 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 dollars dry up. The amount of training will likely 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, aimed at helping to keep the small nation's health care system from collapsing. Future grants will likely bring in the doctors post-collapse, Tomlin said.

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

Besides the grants to companies, foreign assistance goes to California farmers in bundles. In 1994, USAID purchased $23.9 million worth of 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 USAID contracting figures.

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

Despite the hometown connections, local lawmakers who supported the cutbacks say that sending so much money overseas makes less sense during 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. I have and will continue to vote to reduce foreign assistance."


Gallegly said it is a matter of priorities for him, not a sign that he is an isolationist.

"I am not 100% opposed to all foreign assistance, but 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 beneficiary in his district--Marvin Dreyer, a North Hollywood contractor who is providing health and educational 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 from San Salvador. "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 to home than Kazakhstan or Mozambique, support begins to grow.

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

"There is economic self-interest to foreign aid," Berman said. "This money makes sense."


Dispensing Foreign Aid

Congress has approved significant cuts in the country's foreign aid program--which could hit closer to home than most people think. The U.S. Agency for International Development doles out close to 80% of its contracts and grants to U.S. firms, which then provide food, supplies or assistance to foreign nations. Here's a look at some of the local firms dispensing foreign aid:

Foreign Assistance Recipients

1. Marvin Dreyer, North Hollywood: $210,000 to provide health and education contracting services in El Salvador.

2. Montgomery-Harza, Pasadena: $17.2 million to provide construction management services for the expansion of water facilities in Egypt.

3. Parsons Corp., Pasadena: $77.3 million to provide construction management services for 2,500 housing units under the Russian Military Office of Housing.

4. International Medical Corps., West Los Angeles: $6.3 million to provide emergency medical services in Rwanda, Sudan and Somalia. Also $1.7 million to reduce morbidity, mortality and disabilities among Bosnian children.

5. Rand Corp., Santa Monica: $974,610 to collect health, education and economic information on Indonesian individuals and households.

Source: U.S. Agency for International Development

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