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U.S.: Foreign Aid Likely To Suffer In Proposed Budget

Since the end of the Cold War, the U.S. government has used foreign aid as a tool to encourage former communist nations to embrace democracy and market economies. But considering its record budget deficit, expensive military campaigns in both Iraq and Afghanistan and the ongoing war against terrorism, the U.S. is looking to trim traditional foreign assistance programs. The budget presented earlier this week by U.S. President George W. Bush proposes a 13 percent reduction in such aid.

Washington, 4 February 2004 (RFE/RL) -- Two days before issuing his $2.4 trillion budget for fiscal year 2005 (October 2004 to September 2005), Bush left no doubt that American security is his top priority. In his weekly radio address on 31 January, Bush said, "Given the continued terrorist threat against the American people, my budget nearly triples homeland security spending over 2001 levels, including an increase of nearly 10 percent next year, to $30.5 billion. This money will help tighten security at our borders, airports, and seaports, and improve our defenses against biological attack. I'm proposing to raise the budget for the [Federal Bureau of Investigation] by 11 percent, including a $357 million increase in spending on counterterrorism activities. America will not let its guard down in our war on terror."

With so much of the budget devoted to security -- including the continuing military campaigns in Iraq and Afghanistan -- and with a record deficit expected to exceed $500 billion this year, other spending is bound to suffer. But when it comes to foreign aid -- specifically to the countries of Eastern Europe and the former Soviet Union -- it is difficult to determine just how much less they can expect in U.S. assistance.
"There's no question that both the overall budgetary pressures and the war on terrorism are putting a tremendous strain on aid resources that are not going directly to front-line countries."

For example, Bush proposes spending $80 million next year for grants issued by the National Endowment for Democracy. But these grants are not broken down; they are merely targeted toward regions, such as Africa, Asia, Eastern Europe, and the countries of the former Soviet Union.

Similarly, the budget proposal includes $345 million for educational and cultural exchange programs -- again with no specifics other than to say it would be spent on contacts with Eastern Europe and the former Soviet republics.
And spending for Iraq and Afghanistan is not even listed. Joshua Bolten, the director of the White House's Office of Management and Budget, says that amount will be decided later and included in a supplemental request for funding.
Both that supplemental request, as well as Bush's budget proposal for fiscal year 2005 -- which begins 1 October -- must be approved by Congress. In previous budgets, both the Senate and the House of Representatives have given the president much of what he wanted.

But now members of both houses have begun expressing concern over the size of the deficit. As a result, Bush's budget for 2005 proposes a 13 percent reduction from 2004 in traditional foreign assistance programs. Thomas Carothers is the co-director of the Democracy and Rule of Law Project at the Carnegie Endowment for International Peace, a private policy research center in Washington. He tells RFE/RL that Bush is still promoting important nonmilitary aid overseas.
Carothers points to the Bush administration's commitments to the so-called Millennium Challenge Account, under which he proposes to offer $2.5 billion during fiscal year 2005 in financial inducements to countries that develop what he considers to be needed economic, social, and political policies. There is also the international fight against AIDS, for which Bush proposes spending $2.8 billion.

"There's no question that both the overall budgetary pressures and the war on terrorism are putting a tremendous strain on aid resources that are not going directly to front-line countries. And in addition, the administration wants to create the Millennium Challenge Account and contribute to the global fund on AIDS, so by the time you finish all that, there's a lot of pressure on routine budgets for places like Russia or Africa or elsewhere," Carothers said.

Carothers says that by being nonspecific, the Bush administration has the flexibility to make subsequent decisions about exactly how to distribute other aid. "A lot of the decisions are made later about how to allocate within regions, and unless a country's getting a particular pot of money -- like both Pakistan and Uzbekistan did right after September 11 [2001] -- [many countries] now just fall into the regular appropriations and authorizations process," Carothers said.

John Hulsman says there are two other important reasons for the lack of specifics in the Bush budget proposal. Hulsman studies international affairs at the Heritage Foundation, another private Washington think tank. First, Hulsman says, the administration avoids the political risks of issuing early cost estimates that may be criticized if they turn out to be inaccurate.

"By not putting a dollar figure to Iraq, and then by having certain members of the administration put too low a number to what goes on, I think they've seen the political damage done, and so it's better to be honest and say, 'We don't know, and we'll come back to you when we need the money.' I think that, politically, makes sense," Hulsman said.

Hulsman also says that in many respects, foreign aid to a given country under Bush's proposed budget emphasizes financial aid less and puts more stress on awarding contracts to companies from that country to help rebuild Iraq, or having that country profit from allowing U.S. forces to be based within its borders. He says this helps the United States determine who its allies really are, and provides an incentive for cooperation. "It also serves an American diplomatic purpose, both as a carrot and a stick. We're trying to devise ways in the war on terror where countries that help us benefit from it, and countries that don't help us see that they lose benefit from it. And if we don't do that, nobody's going to stick their necks out, and there's no penalty not to bandwagon against us. If you don't reward your friends, there's no incentive for people to support you around the world. They're not going to do it just because they like us. Interests still rule the world," Hulsman said.