- The Washington Times - Wednesday, March 20, 2002

When an editorial in the New York Times warmly endorses a proposal by a Republican president, you instinctively say to yourself, "What on Earth is going on?" Well, what was going on was that President Bush was proposing to add $5 billion to the U.S. foreign aid budget over the next three years. This came in advance of the five-day U.N. meeting on Financing for Development in Monterrey, Mexico. The meeting started Monday, and not to put too fine a point on it seems to be mostly about soothing the pangs of guilt felt by some Americans and our various allies over the war on terrorism.

"Washington's leadership cannot be reduced to a show of military might," cheered the New York Times, making the linkage explicit. "Mr. Bush's proposal could help lead America back toward its traditional role as a generous partner in alleviating misery and spreading economic development." In other words, we should be dropping money as well as bombs.

From a political standpoint, there is no doubt Mr. Bush made an intelligent move, getting ahead of an issue on which Americans routinely get clobbered and doing it at a time when the United States needs to display international leadership. The U.S. foreign aid budget is described as miserly with 0.1 percent of the gross national product devoted to foreign aid, compared to the European average of 0.3 percent. Add to that the fact that 60 percent is devoted to bilateral aid to countries like Egypt and Colombia, which hardly belong in the developing world. Foreign aid for the United States has traditionally been a foreign policy tool, more so than a social program.

Currently, total international assistance to developing countries stands at a little less than $50 billion a year, with about one-quarter going to sub-Saharan Africa. This figure has come down from a high of some $65 billion in 1995. World Bank President James Wolfensohn and Britain's Chancellor of the Exchequer Gordon Brown want to increase that amount to $100 billion a year.

After September 11, the cry went up here and abroad that Third World poverty had produced the 19 suicidal terrorists who murdered 3,000 Americans. From some particularly loathsome quarters it was even rather gleefully suggested that American wealth and power had brought this calamity upon us. Proper atonement, therefore, would mean a commitment to eradicating Third World poverty. One seriously hopes that Mr. Bush and his advisers have not bought into this idea, even on a subconscious level.

The fact is that there is no evidence for this premise. Poverty did not breed the terrorists of September 11, the politics of radical Islam did. The 19 hijackers were not poor or uneducated, they were motivated by religious fanaticism and apparently some bizarre expectations of their rewards in heaven. Is (or possibly was) Osama bin Laden a poor man? Certainly not. He's the son of a Saudi family much wealthier than most Americans will ever dream of becoming. Indeed, most people from poor countries, whether in Africa, the Middle East, Asia, or Latin America are not inclined towards terrorism.

Another fact is that evidence of the good done by foreign aid is sort of skimpy beyond the obvious truth that it makes the donors feel good about themselves. (There have been success stories. The eradication of river blindness and smallpox are often cited as examples of success, and who could quarrel with that?) U.S. Treasury Secretary Paul O'Neill has taken quite a drubbing for articulating the obvious truth that poor countries have received "trillions of dollars of aid" and have "precious little" to show for it.

Mr. O'Neill, however, is not alone in this view. As former World Bank economist William Easterly wrote in the Wall Street Journal this week, "What we should have learned over the past 40 years is that it is not the quantity of aid, or investment or enrollment, that brings development; incentives do. When governments' incentives are for political patronage rather than development, aid supports incompetent, but politically connected schoolteachers, builds schools without textbooks, and roads that attract crooked contractors, but little maintenance."

The Bush administration has proposed converting some aid to grants rather than loans and rewarding governments for good fiscal behavior and good governance. Were it not that the principle of "conditionality" has been part of the World Bank mantra for years, this would sound promising. As it is, holding the international donor community itself accountable for what is done with the money it doles out may be the best example we can set.

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