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Transactional foreign aid doesn’t work

REUTERS/Carlos Barria

William Moseley
President Donald Trump recently declared that he would end U.S. foreign assistance to Central American countries unless they stem the tide of migrants to the United States. This transactional approach to development assistance has never worked and will only make the situation worse.

In his haste to politicize the caravan of migrants making their way across Mexico from Central America, Trump has said he would end aid to Guatemala, Honduras and El Salvador unless they stop out-migration from their countries to the United States. Setting aside the fact that the president doesn’t actually have the power to do this unilaterally, it’s Congress that controls the budget, Trump’s transactional approach to foreign assistance is deeply flawed.

Trump’s world view

President Trump lives in a zero-sum game, ideological universe where another country’s gain is our loss and vice versa. Part of this world view entails conceptualizing foreign aid in short run, cost-benefit terms. In this view, we never want to help another country unless we’re getting something in return.

A transactional approach to development assistance almost never fosters positive shifts in social or economic conditions, it’s a fee-for-service arrangement. In other words, recipient countries understand that they are receiving aid to do certain things, like provide political support in international fora or allow a foreign military to use their bases and air strips. No matter how the aid was intended to be used, there’s often a sense that a country can do whatever it pleases with the money as long as it fulfills the basic, often unwritten, terms of the arrangement.

The United States has a lot of experience with this approach, as it was the modus operandi during much of the Cold War. By the 1970s, the U.S. was often handing out foreign assistance to countries that did no more than align with it over the Soviet Union. This led to a lot of anti-development aid, or aid that led to more autocratic rule, corruption and economic decline. The U.S. support for Mobutu Sese Seko, the dictator of the Zaire (now the DRC) from 1965 to 1997 is a classic example of anti-development foreign assistance. With U.S. support, Seko formed a totalitarian regime, destroyed any semblance of a functioning state, and amassed vast personal wealth. The people of the DRC, and the world, are still living the devastating legacy of this regime.

Benevolent self-interest

I am not naïve enough to believe that countries give aid to others out of the goodness of their hearts. That said, aid tends to work better if it is based on the notion of benevolent self-interest. This perspective suggests that by building up and supporting our friends, we will all benefit in the long run. Stated differently, and in the words of the late Minnesota Sen. Paul Wellstone, “We all do better when we all do better.”

The U.S. also has experience with this approach. After World War II, we launched the Marshall Plan to help rebuild Europe and Japan. To be sure, some of this assistance was influenced by the early days of the Cold War, but it was mainly based on the premise of benevolent self-interest. That is, we believed that the U.S. would stand to gain from prosperous economies in Europe and Japan in terms of export markets, cultural exchange, and general support for a world order that strengthened basic human rights and good governance.

A common critique of the “benevolent self-interest” approach to international development assistance is that the U.S. cannot afford to provide external assistance if it has impoverished people living within its own borders. This critique is based on several false assumptions.

U.S.: last among wealthy countries

The first misunderstanding is that foreign assistance is a significant part of the U.S. federal budget. It is not. The reality is that it is less than .5 percent of the current budget, and even less if you don’t count diplomatic functions. Furthermore, as a percentage of gross national income, the U.S. ranks dead last among wealthy countries in terms of foreign assistance.

The second misunderstanding is the idea that the less money the United States spends on foreign assistance programs, the more it will spend on domestic poverty alleviation. This has never happened. There is no inverse relationship between foreign assistance spending and welfare spending at home.

The third misunderstanding is that the welfare of the American people is disconnected from the welfare of others in the world. Whether we like it or not, other people’s problems are our problems and vice versa. The weakness of public health infrastructure in other parts of the world likely means that disease outbreaks will eventually reach our borders, as we saw with Ebola in 2014. Violence and economic collapse in other regions means that desperate people, fighting for their survival, will try to migrate to other parts of the world, as we now see with migrants from Central America.

In a wealthy country like the United States, the way we think about international development assistance says something about the way we think about the world and the future. Do we want a world of haves and have-nots divided by walls and replete with famine, dictators and desperate migrants? Or do we want a world of prosperous neighbors, intercultural exchange and good governance? I vote for the latter because I firmly believe that “we all do better when we all do better.”

William G. Moseley is a professor of geography and director of the Program for Food, Agriculture & Society at Macalester College in St. Paul. He is the author of “Understanding World Regional Geography.” 

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