Foreign Aid For Sustainable Development

After 45 years America's foreign bilateral assistance program lies dead in the water. Its principal flagship, the United States Agency for International Development, has become a dispirited bureaucracy lacking leadership, resources and rationale. Rather than burden USAID with yet more policy reversals and program redirections--as happened after each pivotal change in electoral politics during the last thirty years--the best approach the Clinton administration can take is to scuttle America's bilateral aid program and begin anew with a concise, clearly defined initiative to promote environmentally sound forms of economic growth.

The American public's present disenchantment with foreign aid cannot be overstated, and this is not just a matter of aid being juxtaposed with competing domestic priorities. What this sour mood underscores is that the nation's political discourse offers neither rationale nor constituency for traditional aid-giving.

Periodic electoral changes have resulted in ideologically inspired shifts in aid policy, as in the abrupt tilt toward free-market development after 1981 and the beginning of the Reagan years. Couple this with USAID'S long subservience to Cold War calculations, particularly to anti-Soviet strategies that compelled support for authoritarian regimes, and the result is a jumble of activities without coherent purpose.

The Decline of U.S. Aid

Overall American foreign assistance, which amounted to one percent of GNP late in the 1950s and double to triple that during the plummy (though not fully comparable) post-World War II Marshall Plan era, has declined to a pitiful level of less than 0.3 percent of GNP. Among all aid-donor nations, only Ireland ranks lower in generosity. But during this period both Congress and the executive branch have cheerfully burdened meager programs, particularly those managed by USAID, with ever more numerous criteria and conditions. Political and security concerns no longer appropriate to the post-Cold War era have inspired many of these constraints; others have resulted from reactionary attitudes, particularly the post-1984 clamp on funding for family planning advice in Third World countries. Labor union complaints that USAID provokes domestic job losses also served to crimp the agency.

The impact abroad of this programmatic jumble, tightfistedness and runaway conditionality has been one of incredulity. In Asia countries receiving official development assistance, as defined by the Organization for Economic Cooperation and Development (OECD), contrast the size and steady flow of big-ticket aid from the Japanese, Germans or even Koreans to the restrictive American loans and grants worth but a fraction of these other credits.

Rather than mount a quixotic effort to reform the U.S. Foreign Assistance Act of 1961, and its cumbersome appendages added over intervening years, the new administration should start afresh. In a revised regime, bona fide aid for economic development should stand ostentatiously apart from other traditional programs, such as military and security assistance, disaster relief, AIDS support and food donations. "Economic Support Funds" that have often amounted to thinly disguised rent for access to strategic facilities in Third World countries should find new berths; the annual $5 billion in military and economic outlays for Egypt and Israel mandated under the Camp David accords should be fully managed by the State Department and the Pentagon.

Securing Sustainable Development

Highlighting the new bilateral aid effort would be a set of innovative domestic and international activities aimed at advancing America's commercial and export interests--often as joint-venture partners with sophisticated companies or agencies abroad--and at addressing the pressing global goals of environmentally sound economic growth and poverty reduction (often referred to as sustainable development). Frequently redefined and much debated, this catchall phrase suggests environmentally sensitive ways to bring about the equitable economic growth the world must have if it is to improve or even maintain living standards.

Agenda 21, a blueprint for global environmental security and one of the principal accomplishments of last year's U.N. Conference on Environment and Development (UNCED) in Rio de Janeiro, sets out the particular characteristics of sustainable development in 40 separate categories. These range from protecting and repairing the atmosphere by reducing greenhouse-gas emissions to the safer disposal of hazardous waste. They include practicing sustainable forms of agriculture--those that gain from sparing use of chemicals and stressing other means of maintaining farm productivity--to winning increased energy efficiencies from industrial and municipal facilities.

While it provides a solid set of guidelines for the future economic and environmental development of the United States and other nations. Agenda 21 does not represent a modern-day Luddite vision. Instead it seeks to apply new technologies to lift the environmental quality of the development process. Sustainable development is not cheap; in a period of tight concessionary finance, most First World policymakers find the cost estimates of environmentally friendly development alarming--with one recent estimate, by UNCED Secretary General Maurice Strong, putting the annual cost of achieving sustainable development in developing countries as high as $625 billion.

Of this enormous figure, UNCED's Strong sees $125 billion a year coming from the 14-nation OECD grouping of aid-donor nations. This would amount to a steep rise from the $54 billion in annual funding these countries now provide under the OECD'S defined categories of official development assistance--much of which scarcely fits the criteria of sustainable development anyway. The current U.S. budget for bilateral development assistance and for population programs--$1.4 billion for fiscal year 1993--represents only a drop in UNCED'S vast, waiting bucket. [1] Political realism and fiscal constraints augur little chance for a dramatic increase in disbursable resources for overseas aid from the OECD countries; even the Japanese program, which reached $10.95 billion in 1991, may peak this year. Yet a simple reallocation by the Clinton administration of existing sums, plus a modest topping-up of the pot, would signal a marked and encouraging shift away from earlier apathy. [2]

Inroads Through the Grass Roots

In the broadest sense the United States stands to gain by helping developing countries; the argument that a more prosperous world benefits America commercially is hoary but accurate. America's new development assistance program must place the focus less on governments and more on community-based efforts to alleviate poverty and achieve environmentally sound forms of development. The near-desperate condition of scores of Third World states will force at least a reluctant acquiescence by their governments in decentralized aid administration.

Several U.S. government agencies already deal directly with the grass roots. While any aid program will experience a level of waste and corruption, funds sent straight to the field, often in relatively small amounts via nongovernmental organizations are far more likely to be better spent than those flowing into the treasuries of countries, such as Somalia, where any effective government has ceased to exist.

In the Third World's rural areas U.S. support for sustainable agriculture, fishery and forestry practices and integrated conservation and development projects would enhance local economies, preserve biological diversity and reduce outputs of carbon dioxide and other greenhouse gases. The United States should also try to bolster the economies and infrastructure of towns in these countries to slow the flow of migrants into already polluted and overcrowded capital cities (from which migrants often seek, in turn, to emigrate to the industrialized world). In selected shanty settlements ringing Third World cities, American aid should back community-based efforts to reduce poverty and achieve decent standards of sanitation, health and education.

In previous eras USAID funds have frequently been allocated to big-ticket infrastructure projects such as roads, dams or irrigation schemes. Often these projects have resulted in intended gains--units of energy supplied or number of hectares irrigated--but only at considerable and unforeseen environmental costs, including widespread deforestation or the spread of waterborne diseases. Because of their high cost, multilateral development banks should finance such projects--but only after careful study of environmental risks as well as conventional benefits.

Alternative grass-roots approaches are likely to be inherently "environmental" because their success will often depend on careful use of locally husbanded resources. These participatory programs will also offer greater flexibility and tend to promote both job creation and democratic values.

Taming Population Growth

Grass-roots development schemes on their own will never achieve significant success unless matched by a straightforward U.S. effort to stabilize the world's fast-growing population. This fundamental need cannot be overstated. What happens during the current decade, as one forecast puts it, "will largely determine whether the world's population can be stabilized in the first half of the next century at somewhat less than its current size of 5.4 billion, or whether it will eventually triple its current size." [3] To help maintain environmental quality, to gain momentum in alleviating poverty or even to slow global environmental degradation emanating from overpopulated developing countries--all of this depends on world population growth coming in at the low rather than the high end of these estimates.

Genuine U.S. support for global population stabilization must therefore form the second major component of the Sustainable Development Initiative. Before Washington can move forward, it must de-link its global aid program from the domestic abortion debate. It must return to the position of leadership in providing family planning services that it held, with considerable success, during the 1970s. Though demand for this sort of support has never been greater, both world contraceptive use and the contraction of family size slowed during the 1980s--largely because of U.S. curtailments. More vigorous American participation, both bilaterally and through the underfunded although effective U.N. Population Fund, would help rebuild momentum. [4]

Foreign Aid that Creates American Jobs

A separate, sharply focused effort to provide vigorous government assistance for American exports of high-quality environmental goods and services (EGS) is the third essential component of the Sustainable Development Initiative. While few yet count support for business as development assistance, Americans should begin aggressively to do so with environmental technologies--both to move the world closer to sustainability and to improve the domestic image of "foreign aid" by creating American jobs.

The environmental industry in the United States, broadly defined to include pollution-prevention as well as pollution-control technologies, has become a core sector of the American economy. Domestically, the industry may generate 800,000 jobs and at least $80 billion in annual sales. [5] Though its expansion has slowed during the 1990s, a resumption of the boom in the industry may be expected if keen regulatory vigilance ensues in 1993 and beyond. But while the more than $400 billion export market for all United States merchandise constitutes another fast-growing segment of the U.S. economy. America's EGS providers have barely begun to sell overseas.

At the December 1992 economic conference in Little Rock, Arkansas, Vice President-elect Gore and others stressed that America has already lost export leadership in the sector. Germany has gained particular strength in water-treatment technologies, and its current level of $10 billion per annum in overall EGS exports surpasses the current U.S. volume of no more than $8 billion. Japan, specializing in air quality control mechanisms, is also moving into an ever stronger position in the EGS export market. Unless the United States makes competitive moves internationally (while also tightening domestic standards to stimulate research, development and production), it will surely lose further ground to these and other countries.

EGS markets in Asia provide a vivid example of how Americans and Asians would benefit from the EGS export promotion element of a new bilateral aid program. Given the global reach of environmental security, both rich Asian economies and the most desperately poor inland provinces in, say, India and China emit toxins, pollutants and global-warming gases into the regional and global environment. In much of Asia increasingly intensive agriculture has meant a mounting use of chemical fertilizers and pesticides, contributing to .coastal pollution that endangers fish and marine resources. Moreover conversion of agricultural land to industrial use has added toxins that are damaging to the region's widespread wet-rice agriculture.

What is worth underscoring is not just the mess that these countries have made, but the intensity of some of their recent responses. In Taiwan more than $10.6 billion has been put aside in the government's budget for an environmental cleanup during the years 1991-96. Similar allocations have emerged, however reluctantly, from other Asian governments, such as Indonesia and Thailand, in response both to middle-class activism and to complaints by environmentally threatened small farmers and fishermen. Asians see the array of environmental technologies possessed by the United States as a source of competitive strength; most also wish to see Washington remain active in the region. So long as America does not define the environmental tradeoff as a zero-sum outcome--requiring total cessation of an offending activity for an amorphous rationale of green purity--Asians seek to do something about the degradation brought about by their numbers and, in places, by their economic success.

American experts and technologies can help Asia to achieve better management of its lands and coastal waters and abate torrents of self-inflicted pollution. But Washington can do far more than support the Asian cleanup. Under the new aid program leverage applied via existing government bodies, such as the Trade and Development Agency, the Export-Import Bank, various national research laboratories or the Department of Energy would help American corporations. They would benefit, for example, by having their clean-energy technologies assist China, India and other energy-poor Asian countries in making environmentally sound use of high-sulfur coal. Such joint ventures would provide jobs for American workers, a more level playing field for American exporters of environmental technology, cleaner air in China and India and, not least, a slowing of the global production of smog and greenhouse gases.

U.S. backing for environmental exports should be conducted separately from general efforts to promote American trade. The innovative U.S.-Asia Environmental Partnership, which seeks to link Asia's emerging need for environmental technology to American capabilities, shows how aid can be married to green trade. Already the US-AEP helps novice American EGS exporters win footholds in the highly competitive Asian market. Similar entities could be established for Africa and Latin America. [6] Or the US-AEP might be expanded to take on roles in global monitoring and information dissemination. Either way, this new program, launched only last year, merits a higher profile.

Practicing What America Preaches

Even with the addition of the green trade component to a new bilateral aid program few ideas advanced here will connect with the public, or build up much steam in Congress, without energetic leadership. After the November 1992 election the Clinton transition team began thinking hard about how to strengthen the sway of environmental concerns within a new administration. Success for the Sustainable Development Initiative, or a variation on this theme, depends on firm White House and Capitol Hill involvement to make it clear to pertinent senators and congressmen that its passage, to replace the Foreign Assistance Act of 1961, is an early priority.

Within the United States achieving true progress toward global sustainability will also require significant initiatives in federal departments, ranging from Agriculture (as in expanding the international programs of the U.S. Forest Service) to the Treasury (taking an ongoing interest in arranging debt-for-nature swaps and similar trades to preserve biological diversity). Import policy decisions made by Congress or by the office of the U.S. Special Trade Representative will directly affect the economic health of developing countries in desperate need of foreign exchange from commodity exports. When it finally achieves full status as a cabinet-level department the U.S. Environmental Protection Agency, which already aches to become more involved internationally, will be in a better position to offer pollution-control advice and technical assistance to other nations. As currently construed as a regulatory body, however, the EPA cannot and should not serve as a lead agency in promoting sustainable development at the core of a new bilateral aid program.

Comprehensive changes in U.S. global trade, monetary and investment policies will also be necessary. The United States will need to reassert leadership in supporting and financing sustainable development and populations programs at the United Nations and at its agencies. The World Bank and the various regional development banks, such as the cash-rich Asian Development Bank, will require continuing support from the U.S. Treasury (which, in turn, must urge these international financial institutions to accelerate progress toward supporting environmentally responsible growth). The promising Global Environment Facility, which the World Bank manages in partnership with the U.N. Environment Program and the U.N. Development Program, will have to overcome current bureaucratic conflicts and grow far beyond its current investment capacity of $1.3 billion.

As America makes these shifts in international perspective its full credibility abroad will become established only if it links these protestations of intent to a strenuous effort to achieve greater domestic sustainability. A commitment to achieve economic progress at home by reducing America's grossly disproportionate consumption of energy and other mostly nonrenewable resources would provide telling evidence that America practices what it preaches. So would agreeing to internationally negotiated targets and timetables for stabilizing the high levels of greenhouse gases that America emits--and that harm all nations.

Finally, the new bilateral aid program suggested here takes its cue from the profound shift in global thinking about the nature of development. Successive blueprints for material advancement have been tried, and have failed. Smokestack socialism, the fertilizer-fed Green Revolution, Basic Needs or Appropriate Technology (which favored--always for others--such wonders as hand-operated butter churns and nightsoil methane converters): all these and other prevailing wisdoms have seen their day. What remains is the sure sense that the carrying capacity of this planet cannot be sustained without measured reductions in human population growth and a lessening of the exploitive nature characterizing most development occurring after World War II.


[1] Of the total of $26.3 billion in the FY 1993 U.S. budget, 54 percent is destined for the International Monetary Fund, the World Bank, regional development banks and other multilateral agencies. The bilateral portion of the foreign aid budget, amounting to just over $12 billion, includes food, military and security aid, politically motivated "economic support" funds and assistance in other non-development categories.

[2] During 1992 a number of private organizations, including the Overseas Development Council, the Environmental and Energy Study Institute and the World Resources Institute, recommended recasting America's bilateral development assistance along similar lines, urging initial annual funding in the $2 billion range.

[3] Sharon L. Camp, "Slowing Population Growth," in Challenges and Priorities in the 1990s, Washington, (DC): Overseas Development Council 1992, p. 482.

[4] For a full discussion of the population issue and new U.S. approaches, see Michael S. Teitelbaum, "The Population Threat," Foreign Affairs, Winter 1992/93, pp. 63-78.

[5] The OECD Environment Industry: Situation, Prospects, and Government Policies, Paris: Organization for Economic Cooperation and Development, 1992, p. 21. Other estimates place the U.S. industry's total sales at as high as $140 billion, and the worldwide market at $300 billion growing to $600 billion by the end of the century.

[6] A bill to create a Latin American counterpart was introduced during the last session of Congress.

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