President Bush yesterday, at the White House summit on Foreign Aid, called for continued commitment to increasing foreign assistance. While recognizing that the current global economic crisis would create pressures on governments to cut back on aid, he stressed that doing so would be an economic and moral error.
Comment: The Bush administration is in the latter stages of preparing a budget to submit to Congress in January, and may well follow President Bush's prescription in that budget. However, it is his successor who will have to move that budget through the Congress and deal with the crisis over the next four (or eight) years. It is that successor's administration that will have to convince other donor governments to devote their resources to foreign aid, and that will have to deal with the governments of aid recipient countries to assure that they merit aid and use it well.
My guess is that President Bush is whistling in the wind, and that there will be a significant cut in funding for foreign assistance in the next few years. I would also guess that security supporting assistance will be protected from such cuts, given the political interests in Israel, Iraq and Afghanistan; as a result, many of the world's poorest nations will suffer disproportionately large cuts.
Cuts in foreign assistance would be a major problem for the poorest countries which depend on aid to fund a significant portion of government expenditures. I expect there to be major problems for other developing nations. Most developing countries export raw materials and import manufactured goods. The economic crisis is going to cut the demand for the raw materials; since foreign debt must be paid, the result probably will be a significant reduction in the ability to import the capital equipment needed for development.
China, India and other countries that have been successful in development in recent decades have seen foreign direct investment provide much more financing than has foreign assistance; they have justified that investment in significant part by rapidly increasing exports of manufactured goods and in part by rapid development of their internal markets. The global crisis will tend to dry up the sources of capital, reduce the demand for their manufactured exports, and indirectly cut the growth rate of their internal markets. We will have to wait to see how closely the developed and developing countries have been linked by globalization, but I am not sanguine about the near-term economic future of the newly industrializing countries.
The current decrease in food availability on international markets and increase in food prices has already caused an increase in hunger and driven an estimated 75 million more people into poverty. Unfortunately, things are likely to get much worse for many of the world's poorest people before they again start to get better.
President Bush may be forgiven for his (forced?) optimism, given that he was speaking at a White House event that no doubt has been in planning for many months. What else could he say to the gathered audience?
On the other hand he pointed with pride on a key foreign assistance initiative of his administration, the Millennium Challenge Corporation. The MCC is generally considered to be a failure, having only delivered some ten percent of the funding that had been appropriated to it. JAD
More information:
No comments:
Post a Comment