Romney calls for overhauling U.S. foreign aid

NEW YORK CITY — Mitt Romney said Tuesday that the United States must rethink how it awards foreign aid, and should work more with the private sector to nurture free enterprise and open economies in developing nations.

“Nothing we can do as a nation will change lives and nations more effectively and permanently than sharing the insight that lies at the foundation of America’s own economy — free people pursuing happiness in their own ways build a strong and prosperous nation,” said Romney, addressing the Clinton Global Initiative headed by former President Bill Clinton.

Romney called the United States the most charitable nation in the world, but said sometimes aid money has not been used effectively.

In 2011, the U.S. government provided about $30 billion in development assistance, more than twice as much as the second most generous country, Germany. But the U.S. was 19^th on the donor list if aid dollars are considered as a percentage of gross national income.

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“We see stories of cases where American aid has been diverted to corrupt governments,” he said. “We wonder why years of aid and relief seem never to extinguish the hardship, why the suffering persists decade after decade.”

American foreign aid has three legitimate purposes – humanitarian relief, strategic national interests, and helping developing nations, Romney argued. The third ought to be refashioned, he said, a move that could also lessen anti-American sentiment.

Romney said that while religious extremism is a cause of hostility in the Middle East, so are the large populations of young people without job prospects.

“Idle, humiliated by poverty, and crushed by government corruption, their frustration and anger grows,” he said, citing the fruit vendor in Tunisia whose self-immolation sparked the Arab Spring revolutions last year.

Romney is proposing what he calls “Prosperity Pacts,” where U.S. aid would be partly contingent on the recipient government working with the private sector to overcome obstacles to a flourishing economy.

“In exchange for removing those barriers and opening their markets to U.S. investment and trade, developing nations will receive U.S. assistance packages focused on developing the institutions of liberty, the rule of law, and property rights,” Romney said.

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Particular attention will be paid to gaining access to capital for small- and medium-size businesses that are too large to obtain it from micro-finance and too small to get it from banks, he said.

Clinton, who created the initiative in 2005 to help address global problems, introduced Romney by noting that the two men worked together in support AmeriCorps. The federal program helps thousands of adults serve their communities through partnerships with local and national nonprofit groups.

Romney praised Clinton’s work on global crises since he left the White House in 2001.

“President Clinton has devoted himself to lifting the downtrodden around the world. One of the best things that can happen to any cause, to any people, is to have Bill Clinton as its advocate,” Romney said.

Clinton is working hard to reelect President Obama, and his full-throated endorsement of Obama at the Democratic National Convention earlier this month was credited with helping the president gain in the polls.

“If there’s one thing we’ve learned this election season, it’s that a few words from Bill Clinton can do a man a lot of good,” Romney said. “All I got to do now is wait a couple days for that bounce to happen.”

Romney did not mention Obama, who is also in New York on Tuesday, or criticize his foreign policy, which has been a staple of Romney’s recent remarks on the campaign trail.

The Romney proposal is likely to prove popular with Americans, who generally don’t like foreign aid and believe that the United States has been wasting billions without receiving sufficient appreciation in countries such as Pakistan, Afghanistan and Iraq.

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Development experts and practicing diplomats contend, however, that requirements that make aid conditional can end up harming American strategic interests if they cut off aid that is helps stabilize countries that are threatened with collapse.

For example, the United States is now proposing to relieve $1 billion in Egypt’s debts, fearing that unless the volatile country finds a way to ease its cash shortage and stabilize its economy, poverty will worsen and extremists could be strengthened.

Sometimes the barriers to U.S. investment aren’t entirely in the control of the government. They can also stem from the practices and attitudes of businesses in the country, as was been with case in some markets in Japan, for example.

Defenders of U.S. foreign aid say that it accounts for only about 1% of government spending, and buys relationships and stability that make it well worth the expense.

[For the record, 6:14 p.m. Sept. 25: An earlier version of this post included slight differences in two of Romney’s quotes. Both have been corrected to show his speech as he delivered it.]

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seema.mehta@latimes.com

Twitter: @LATSeema