From: Keith Addison <[EMAIL PROTECTED]>
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To: [EMAIL PROTECTED]
Subject: [Biofuel] Myth: More US aid will help the hungry
Date: Tue, 26 Oct 2004 15:25:29 +0900
http://www.globalissues.org/TradeRelated/Poverty/FoodDumping/USAid.asp
Myth: More US aid will help the hungry
With kind permission from Peter Rosset of the Institute for Food and
Development Policy (or FoodFirst.org as it is also known), chapter 10 of
World Hunger: 12 Myths, 2nd Edition, by Frances Moore Lappˇ, Joseph Collins
and Peter Rosset, with Luis Esparza (fully revised and updated,
Grove/Atlantic and Food First Books, Oct. 1998) has been reproduced and
posted here. Due to the length of the chapter, it has been split into sub
pages on this site.
http://www.foodfirst.org
Myth 10:
More U.S. Aid Will Help the Hungry
MYTH: In helping to end world hunger, our primary responsibility as U.S.
citizens is to increase and improve our government's foreign aid.
OUR RESPONSE: Once we learned that hunger results from antidemocratic
political and economic structures that trap people in poverty, we realized
that we couldn't end hunger for other people. Genuine freedom can only be
won by people for themselves.
This realization doesn't lessen our responsibility, but it does profoundly
redefine its nature. Our job isn't to intervene in other countries and set
things right. Our government is already intervening in countries where the
majority of people are forced to go hungry. Our primary responsibility as
U.S. citizens is to make certain our government's policies are not making
it harder for people to end hunger for themselves.
In light of the demonstrated generosity of many Americans, most of us would
probably be chagrined to learn that U.S. foreign aid is only 0.15 percent
of our nation's gross national product -- that's less than half the
percentage of GNP Germany provides, for example, and less than one-fifth of
that provided by the Netherlands.1 Total U.S. bilateral assistance dropped
greatly during the first half of the 1990s, as it has for most other
wealthy nations.2 From a high of $20.2 billion in 1985, it fell to $12.3
billion by 1994 and has remained low.3
For the world's hungry, however, the problem isn't the stinginess of our
aid. When our levels of assistance last boomed, under Ronald Reagan in the
mid-1980s, the emphasis was hardly on eliminating hunger. In 1985,
Secretary of State George Shultz stated flatly that "our foreign assistance
programs are vital to the achievement of our foreign policy goals."4 But
Shultz's statement shouldn't surprise us. Every country's foreign aid is a
tool of foreign policy. Whether that aid benefits the hungry is determined
by the motives and goals of that policy -- by how a government defines the
national interest.
During the postwar decades of the Cold War, U.S. foreign assistance was
largely defined by a view of the world as divided into two opposing camps.
That often meant arming and propping up undemocratic and repressive
governments -- in Iran, the Philippines, El Salvador, Indonesia, and many
other countries -- only because they were loyal U.S. allies.
The U.S. government acted as if our vital interests were threatened by any
experiment that didn't mimic the U.S. economic model -- the free market and
unlimited private accumulation of productive assets. Any nation seeking to
alter its economic ground rules -- Nicaragua, for example -- was
immediately perceived as having "gone over to the other camp" and thus an
enemy. Punishment was swift-usually including the suspension of aid and the
arming of opponents of the offending government.5
In the rather negative panorama of the Cold War, U.S. foreign assistance
did nevertheless have poverty alleviation as a goal, albeit not for the
best of motives. Driven by the fear that "communism" would defeat
capitalism in the battle for the "hearts and minds" of poor third world
populations -- by offering them the possibility of greater improvements in
material well-being -- the United States followed an on-again-off-again
policy of funding "basic needs."
In Central America, while propping up corrupt dictatorships with Economic
Support Funds (ESF) -- basically cash disbursements -- and keeping them in
power with generous military aid and training, the United States also
pressed for and financed basic poverty alleviation policies. The latter
included very limited land reforms, marketing boards to help small farmers
sell their grain, basic infrastructure development, etc. These reforms were
seen as necessary complements to military aid to mollify the populace and
keep our friendly strongmen from being overthrown by the disgruntled
masses.6
During the entire Cold War it often seemed as though the real goal of
foreign aid was making the world safe for U.S.-based corporations.
Nevertheless, this goal was often mixed up with Cold War strategic aims,
making such a black-and-white analysis difficult. Since the end of the Cold
War, however, the more blatant economic aims of foreign assistance have
come to the forefront.
From defending freedom in the face of the "communist threat," the goals of
foreign aid have more clearly emerged as the promotion of the free market
and free trade-of the sort we described in chapters 7 and 8. A 1997
newsletter of the U.S. Agency for International Development (USAID), the
government agency in charge of U.S. foreign assistance, put it this way:
"The principal beneficiary of America's foreign assistance has always been
the United States. . . . Foreign assistance programs have helped the United
States by creating major markets for agricultural goods, new markets for
industrial exports and hundreds of thousands of jobs for Americans."7 The
same report argued forcefully that the amount of money spent on aid be
upped significantly in order to maintain U.S. "leadership in the global
arena."8
Defining our national interest as opening markets for free trade lines up
our nation's might -- with our tax dollars and our country's good name --
against the interests of the hungry. As we have seen, a different kind of
change -- profound, society-wide change in control over food-producing
resources -- is a sine qua non for ending hunger. It is impossible to be
both against this kind of change and for the hungry.
POVERTY IS NOT THE FOCUS OF AID
Looking at our foreign aid, we want to highlight seven of the consequences
of the current definition of the national interest.
First, U.S. economic assistance is highly concentrated on a few
governments. Its focus has nothing to do with poverty. Out of the 130-odd
governments receiving U.S. bilateral economic assistance in the mid-1990s,9
just 15 countries got over half of the total (see table). Israel and
Egypt-representing U.S. geopolitical interests-together got almost
one-third. The world's 10 poorest countries-most of them in Africa-received
less than 5 percent of all U.S. bilateral economic assistance in fiscal
year 1994.10 Despite widespread poverty in sub-Saharan Africa, for example,
only two of the top ten recipients, South Africa and Ethiopia, are in that
region, and the former is its most economically developed nation.
Top 15 Recipients of U.S. Economic Assistance* in 1996 ($ millions)
1. Israel 1,200.0
2. Egypt 815.0
3. Russia 263.0
4. Ukraine 161.4
5. India 156.3
6. South Africa 131.9
7. Peru 123.9
8. Bolivia 121.0
9. Haiti 116.0
10. Ethiopia 108.0
11. Turkey 105.8
12. Bosnia-Hercegovina 80.6
13. Bangladesh 77.8
14. West Bank/Gaza 76.0
15. Philippines 74.9
*Economic assistance includes development assistance, Economic Support
Fund, Food Aid, Peace Corps, International Narcotics Control
Source: U.S. Agency for International Development, Congressional
Presentation, Fiscal Year 1996 Request.
Lured by the opportunities of virgin markets, U.S. foreign policy and
assistance have found a new target: Eastern Europe and the former Soviet
Union, which now compete for aid with the much poorer third world countries
(see table).
Second, aid is used as a lever to impose structural adjustment packages on
the third world. Since the 1980s U.S. foreign assistance worldwide has been
conditioned on the adoption of structural adjustment packages designed by
the World Bank and the International Monetary Fund,11 policies that we
described in chapters 7 and 8.
Making a grant or loan conditional on some action being taken by the
recipient is called "conditionality." Conditionality works by "tranching"
economic assistance packages-that is, dividing the total sum to be donated
or loaned to a recipient country into a series of smaller disbursements to
be made over time, called tranches. Before each disbursement is made, the
recipient must make policy changes spelled out in the "covenants" of the
aid agreement that they must sign with USAID.12
Between 1982 and 1990 nine U.S. economic assistance packages provided to
the Costa Rican government contained a total of 357 "covenants" that made
disbursement conditional on more than twenty structural changes in the
domestic economy. These included eliminating a grain marketing board that
assisted small farmers; slashing support prices for locally grown corn,
beans, and rice; allowing more imports from the United States; easing
regulations on foreign investment and capital flows; and complying with
specific clauses in similar agreements signed with the World Bank and the
IMF.13
Such conditionality works in a carrot-and-stick fashion. When the Costa
Rican congress balked at approving an outrageous new law demanded by the
United States that would allow aid to bypass the government and go directly
to the private sector, USAID suspended a $23 million disbursement.14
Ironically, this came at the very moment at which the Costa Rican Central
Bank had exhausted the foreign exchange reserves needed for the daily
operation of the economy. An internal USAID memo written several months
before the incident occurred-which we obtained access to years later-showed
just how cynical the United States can be. A top USAID administrator
predicted the month in which the reserves would run dry and recommended
timing a key disbursement to take advantage of that moment as leverage to
guarantee that the desired law would be passed.15
It was precisely the replication of changes like this-and of structural
adjustment-throughout the third world that produced rising inequalities in
the 1980s and 1990s. For most of the third world the 1980s were a lost
decade, during which living standards of impoverished majorities fell to
pre-1960s levels. Not surprisingly, this became a period of widespread
economic, social, and ecological crisis. Millions of the rural and urban
poor were cut out from opportunities for progress. Credit, extension,
subsidies, and technical education all fell by the wayside as budgets were
slashed, and the lifting of tariffs flooded local economies with imported
foodstuffs often placed on the world market at prices below local costs of
production. As a consequence, poor farmers were caught in a squeeze between
the high price of chemicals and other farm inputs and low crop prices,
often losing their lands and moving to cities.16
Third, food aid often does not target the hungry. When they hear about
foreign aid, many people automatically think of ships loaded with food, but
such aid constitutes only a fraction of total U.S. bilateral foreign aid,
hovering around 9 percent during the 1990s.17 Moreover, only about 5
percent of total aid is for emergency relief.18
Of the nearly 3 million tons of food aid provided by the United States in
1996, almost one-quarter was in the form of PL 480 Title I sales,19 in
which food is sold to third world governments on easy credit terms for
resale to local livestock industries as feed, and to local food-processing
companies who make pasta, bread, cooking oil, and other products for urban
consumers.20 While the proceeds from these sales must generally be used for
"development" purposes, which are specified by USAID, Title I has long been
used as a primary tool to create new markets for U.S. grain exports. In
practice, it functions as corporate welfare. According to a study published
by the University of Nebraska Press:
The food-aid program represents a free government service designed to help
grain-trading companies expand both their current and future sales. Title I
sales generate the same profits for the big U.S. grain companies as does
any other commercial export. The only difference is that the U.S.
government immediately pays the bill. From the point of view of the grain
corporations, then, Title I creates immediate markets by having the U.S.
government finance purchases that otherwise might not have been made. The
recipient countries, meanwhile, come to depend on these foreign food
supplies. . . . By encouraging the growth of poultry farms, wheat mills,
and soap and vegetable-oil factories, PL 480 helps create a structural
dependence on continued imports. When the food aid stops, these industries,
needing the supplies to continue their level of operations, will pressure
their governments to keep importing the commodities on commercial terms.21
USAID bragged in a 1996 report on food aid that "nine out of ten countries
importing U.S. agricultural products are former recipients of food
assistance."22 Far from feeding the hungry, Title I food aid first of all
puts money in the pockets of giant grain corporations like Cargill, who
provide and ship the products;23 second, supports factory-style poultry
producers and food processors; and finally, helps shift consumer tastes in
recipient countries away from locally grown crops toward wheat products
like bread and pasta.24
Much aid to Africa, for example, has been in the form of wheat, even though
wheat grows well in very few parts of the tropics. For many countries, such
a shifting of tastes is no small concern-it makes long-term self-reliance
even more difficult. South Korea became the largest third world importer of
U.S. agricultural goods after years of food aid coupled with intensive
marketing of wheat products by AID. This marketing campaign changed the
South Korean diet drastically by creating a growing demand for wheat.25
Even the funds earned from food sales that are earmarked for "development"
frequently end up working against the hungry. These often go for so-called
"self-help" measures, like the promotion of further trade with the United
States, and market-development activities like trade fairs and port
construction.26
A second kind of food aid, Title III, works just like Title I but is for
poorer countries, allowing the United States to forgive the loans for the
purchased food. In 1996 it accounted for about one-eighth of total food
shipped.
The Food for Progress program, another type of food aid, was created in
1985 to reward governments who undertake structural adjustment programs.
According to the enabling legislation, Food for Progress was "designed to
expand free enterprise elements of the economies of developing countries
through changes in commodity pricing, marketing, import availability, and
increased private-sector involvement."27 In other words, food is once again
being used as a lever to open markets for U.S.-based corporations. While
Food for Progress was originally targeted at the third world, the emphasis
soon shifted: In 1996, thirty-seven of the thirty-eight donations made
under this program went to former socialist countries in Eastern Europe,28
the newest frontier in market opportunities for U.S. food exporters. Food
for Progress shipments accounted for one-seventh of the food donated that
year.29
The remaining category of food aid, Title II, consists of food that is
donated either to support specific development projects or for emergency
relief, generally in poor countries, and it accounted for slightly more
than half of the food shipped in 1996.30 These, finally, are the proverbial
shiploads that we imagine being sent to the poor in third world countries.
Yet even this food often has less than positive impacts.
Title II development food aid is usually distributed through so-called
"food-for-work" programs that hire the jobless to provide manual labor for
road improvement, irrigation development, and other infrastructure
projects, in exchange for food. In theory, society as a whole benefits from
this sort of program-the jobless get to eat, while the rest of society
gains from the public works projects. Yet a careful examination shows that
food-for-work benefits the well-off disproportionally, while the poor
receive no long-term gains.
An example from Haiti, where so many people are deprived of enough to eat,
makes this clear. In a particular village, one family controlled the local
government and community offices.31 When a U.S. relief agency came to the
village with a food-for-work program, this same family was chosen to
administer it. Jobless villagers built roads and tended the gardens of a
well-to-do village leader, which took them away from their lands five days
a week. The wealthy family gained benefits through the improvement of their
lands, better access to markets for their produce, and increased patronage
power. The workers gained temporary work, which provided food during the
slack agricultural season, at the cost of not attending to their own plots,
but they did not gain long-term, fundamental changes or a sustainable
lessening of their poverty and hunger. Similar stories dot the landscape of
food-for-work programs.32
Fourth, food aid can actually forestall agricultural development that could
otherwise alleviate hunger. The inflow of food aid-even in many emergency
cases-has proved time and again to be detrimental to local farm economies.
Cheap, subsidized, or free U.S. grains undercut the prices of locally
produced food, driving local farmers out of business and into cities.
Somalia is only one case in point. When a civil war began in 1991, domestic
transportation was interrupted, precipitating a food crisis in large
regions of the country. The UN estimated that almost 4.5 million
people-over half of the estimated total population of the country-were
threatened by severe undernutrition and malnutrition-related diseases at
that time.33
Yet in December of 1992, when U.S. troops landed under the UN banner to
distribute food and achieve a cease-fire among hostile factions, the worst
of the famine was already over. The death rate had dropped from three
hundred per day to seventy, and good crops of rice, sorghum, and corn from
the agricultural regions of Afgoye and the Shebell River valley had already
been harvested.34 Nonetheless, food aid poured in, driving down the prices
received by local farmers for their harvest by a whopping 75 percent.
Sometimes they couldn't sell their crops even at the lower prices. Mrs.
Faaduma Abdi Arush, a Somali farmer, tried to sell her corn to six relief
agencies. None would buy it, as the U.S. government only provided them with
funds to buy American food from U.S. companies. Many Somali farmers, unable
to make a living by selling their produce, were forced to abandon their
farms and join the lines for handouts of imported food.35
Nonemergency Title II food aid is sometimes used to support activities such
as mother and child health, nutrition, and education programs.36 The cash
for the programs is raised by selling food aid in the recipient country. Or
the food is used for lunch programs as an incentive for children to stay in
school, or mothers at health centers receive food when they bring their
babies to be treated.
While many of these activities seem at first glance to be laudable, we need
to look deeper. First and foremost, this kind of food aid is still about
the injection of food into the economy of recipient countries, which
results in the distortion of food markets. Just as it does with other forms
of food aid, this distortion weakens the local food system, drives farmers
off the land, and ultimately creates long-term dependency on imported U.S.
agricultural commodities.37 These effects remain whether we are talking
about food-for-work, health, or school programs.38 That is not to say that
all programs supported by food aid are misguided. Rather, other ways are
needed to carry them out.
For example, mother and child health and nutrition programs can offer
substantial benefits to recipients. The alternative to using imported food
for these programs should be to purchase food from surrounding areas.39
This system would strengthen farmers, local merchants, and the economy of
the country, as local expertise, knowledge, and resources are utilized to
produce the food. As income is generated internally, communities become
self-sufficient and sustainable.
However, food aid-based development projects continue to depend on foreign
expertise, knowledge, and outside resources to generate income. These
projects are not self-sufficient, nor are they sustainable when the aid
ends. Not surprisingly, food aid-based development projects have
historically been failures. Says former food-aid manager Michael Maren,
"Africa is littered with the ruins of such projects."40
Fifth, through military aid, the United States contributes directly to
armed conflicts around the world-which are a major cause of hunger and
famine. Since the end of the Cold War, U.S. military aid has declined, yet
in 1998 it still totaled $6 billion, outweighing development assistance by
a six-to-one ratio.41 Arms sales add significantly to the impact of our
military aid. Needing to cope with an overproduction problem in the
post-Cold War era, American defense contractors have aggressively sought
overseas markets, usually with government subsidies to do so. U.S. arms
sales in the early 1990s exceeded those of all other nations combined.42
Global military expenditure by governments is estimated at $1 trillion
annually,43 and that doesn't take into account illicit arms trafficking to
nongovernmental belligerents. For every four weapons involved in such
trafficking, three are estimated to come from the United States, many of
them originally via aid or credits.44
Between 1985 and 1995, the belligerent parties in forty-five conflicts
around the globe obtained $42 billion worth of weapons from the United
States. In 90 percent of the fifty most significant conflicts in 1993-94,
one or more parties received U.S. weapons or military technology.45 Through
trafficking, arms sales, and military aid, the United States helps keep
dozens of civil wars and other armed conflicts around the world alive and
kicking. This is particularly alarming in light of our conclusion in
chapter 3 that contemporary episodes of famine are often the product of
armed conflicts like that which took place in Somalia. U.S. arm sales and
military aid make that possible.
Sixth, "good" aid projects serve a public relations, "window dressing" or
"fig leaf" function that obscures an uglier reality. Focusing on the best
projects funded by USAID can be misleading as to the overall impact of
foreign aid. There are no doubt some projects that when viewed outside of
the larger context appear unambiguously positive-but in the final analysis
they really facilitate the far more common programs that have net negative
impacts, simply because the "best projects" make the very idea of aid more
palatable.
In the 1990s "humanitarian relief" missions, festooned with journalists and
slick publicity, have been key to building a positive image of USAID-even
though such activities represent a tiny proportion of the agency's budget
and have ample problems of their own as described above. Environmental
projects can also play a public relations role.
One of us had the opportunity to work with such an environmental effort
during the 1980s and early 1990s, the Integrated Pest Management Project
for Central America. Initially funded with $5 million from USAID, the
project's laudable goal was to reduce pesticide use among small farmers in
Central America. Who could argue with that? Nevertheless, our experience
makes us think twice whenever we see something from USAID that seems too
good to be true.
The project suffered from a typical design flaw, namely, a top-down
conception of technological change. Project scientists-mostly Ph.D.-trained
expatriates-were to research alternatives to pesticides and then train
national "experts" in each country, who were to train local extension
agents, who would then transmit the new information to farmers. Of course,
this rarely happened-because of kinks in the long chain of collaborating
institutions and individuals and because the alternatives finally presented
to farmers rarely fit their reality.
The initial funding was approved at the tail end of the "basic needs"
period of U.S. foreign assistance, so the project was said to be targeted
at small farmers growing food crops, but project implementation coincided
with the new emphasis in the 1980s on structural adjustment and related
export promotion. Thus, USAID functionaries continually pressed project
staff and the host institution to switch our focus to export crops and
larger farmers. The host institution and staff held out against these
changes, eventually leading USAID to discontinue its support for the
project and redirect its funds to more pliable host organizations.46
Before the project's funding was terminated, an incident occurred that
would be comical if it were not so sad. Congress passed a new requirement
that USAID projects incorporate both "women and men" as beneficiaries, in
response to criticisms that assistance favored men and left women out. This
regulation was imposed when the project came up for renewal. A memo went
out from USAID headquarters instructing all field staff to be sure to
incorporate the new requirement in future funding requests. In response,
the project leader had a secretary do a universal "search and replace" in
her word processor. Each time the words "people," "persons," "farmers,"
"students," "beneficiaries," etc., were used in the renewal request they
were replaced with, or preceded by, "women and men." Thus, one section read
that "24 women and men farmers will be invited to the field day." No other
changes were made to the proposal, which was approved without comment. In
subsequent congressional hearings, USAID staff were able to argue that
gender was now an integral component of development aid.
But these details about the project actually miss the real reason its
overall impacts have been negative. The project was frequently used by
USAID to show policy makers, journalists, Central American government
functionaries, and others the friendly face of U.S. policy in the region.
Even though it accounted for a tiny fraction of USAID money spent during
the 1980s, it had a high profile. Thus, it served as a fig leaf hiding the
true thrust of aid spending in the region: the overthrow of the
revolutionary Sandinista government in Nicaragua47 and the structural
adjustment of the region's other economies.48 In the end, its real function
in the larger scheme of things was to make the overall U.S. presence in
Central America more palatable, thus indirectly facilitating less
beneficent ends.
Finally, even most "development assistance" fails to help the poor and
hungry. Only 18 percent of U.S. bilateral aid is even called development
assistance. How is this development aid spent? During the 1960s and early
1970s, much of it went to install infrastructure (power plants,
transportation and communication facilities, and the like) benefiting
mainly businessmen, landlords, and others in an economic position to take
advantage of such facilities. In the late 1970s and early 1980s, the trend
was more toward smaller-scale projects, including agricultural credit
programs and the development of small and medium-size businesses. But even
these smaller-scale projects failed to reach the poorest, concluded a major
study by the World Bank and the International Monetary Fund.49
This general finding was borne out by USAID's own program evaluations. One
report reviewing twelve years of small-farm credit programs noted that
benefits were "highly skewed against the small farmer and the landless
poor."50 The reasons for this failure were clear enough-very few of the
poor had titles to farms large enough to satisfy the requirements of a
credit application. Since the majority of rural poor in most third world
countries are landless, even the best farm credit program could never help
them.
In the 1980s and 1990s a major trend has been to promote nontraditional
exports. In Central America, for example, USAID has been pushing farmers
into hopelessly competing for volatile niche markets by promoting new
export crops. These Non-Traditional Agricultural Exports (NTAEs) range from
passion fruit and broccoli to macadamia nuts and melons and have been
vigorously advanced through massive foreign aid subsidies and fierce
pressure on local governments. Central American farmers and governments now
find themselves saddled with risky agricultural ventures that have
destabilized traditional production of food crops for local consumption.
The net result is deepening poverty and economic insecurity in agricultural
communities throughout Central America. In stark contrast to USAID's stated
aim of stabilizing Central America's economies, NTAE programs have
intensified the inequities between small farmers and wealthy landowners.51
A 1983 USAID project in the Gu‡cimo district of Costa Rica offers a
poignant yet not atypical case in point. Investing money, credit, technical
assistance, and marketing expertise, USAID encouraged poor farmers at the
El Indio land settlement to switch from traditional yellow corn production
to cocoa, tuber crops, and ayote squash for export to the growing Latino
market in the United States. In the project's first season, farmers were
provided with imported, disease-free seed, a full-time extension agent, and
an advance purchase contract. The incomes of the farmers who participated
soared in the first year, up to forty times more per acre than their
neighbors who continued growing corn.
But just one year later, the El Indio venture began to unravel. The NTAE
project no longer provided seeds, there was no marketing contract, and the
extension agent was employed only part-time. Still, enticed by the previous
year's success, more farmers took the plunge. The results were disastrous.
Crop prices dropped as global competition heightened. Due to the low-grade
seeds used the second year, much of the harvest was hit by
disease-discouraging buyers from all but a small portion of the crops. Half
of the farmers defaulted on their credit, and the forty who persisted
defaulted in the following year.52
The El Indio experience and many others like it provide a cautionary tale
of the pitfalls of pushing exports at all costs. Promoting
capital-intensive crops for unproven markets, NTAE projects are a
high-stakes gamble for peasants. Small farmers face hurdles at every step
along the way.
In Guatemala, for example, the initial investment to plant nontraditional
export crops ranges from five to fifteen times higher than that for
traditional corn and beans.53 Crossing this barrier means taking out risky
credit and loans that frequently have interest rates biased against poor
farmers and can easily lead to losing the farm after a bad harvest.54
The fate of small farmers in the nontraditionals industry has been similar
to their fate with traditional exports and in the Green Revolution.
Nontraditionals are expensive to produce-requiring enormous quantities of
pesticide, fertilizer, and technical expertise, favoring larger, better
capitalized producers. Because these are perishable products, small farmers
are often unable to place their produce in Northern markets with quality
standards, giving the edge to the giant fruit companies.
Unable to compete with better-financed growers, and heavily in debt because
of high production costs, many small farmers have been driven out of
business by trying to produce nontraditional exports. At the same time,
chemical pesticides and fertilizers have seriously degraded the productive
capacity of the soil in many regions and contaminated the environment.55
Growing corn and other basic staples is no longer profitable either, due to
the flooding of local markets with cheap grain via free trade, and to
cutbacks in price supports and marketing imposed by structural adjustment
programs. As a result, small farmers have migrated to cities and to
developed countries in huge numbers, fleeing the policy-driven collapse of
rural livelihoods. The winners under current policies have been, first and
foremost, international companies able to compete in the emerging global
food system, and the net losers have clearly been the rural poor and the
environment.
While the poor may not be the chief beneficiaries of development assistance
projects, one group that does benefit handsomely includes the U.S.
corporations, consulting companies, and universities that get USAID
contracts. An independent study found that 29 percent of U.S. development
assistance was 100 percent tied to purchases from companies in the United
States-an amount greater than the total of U.S. assistance to sub-Saharan
Africa.56
Funds for aid pass though many hands before reaching the supposed
beneficiaries. So the question we must ask is, How likely is it that
resources channeled through the powerful will help the powerless?
The already better off are positioned to capture a disproportionate share
of any economic gains offered by development aid. And with their new
resources, they can often further tighten their grip over land and other
productive resources, thereby worsening the plight of the poor. Thanks to a
bribe to a technician, an irrigation pump earmarked for a cooperative of
poor farmers in Bangladesh winds up belonging to the village's richest
landowner; he graciously allows his neighbors water from the new well in
exchange for a third of their harvests. The pump and the added revenue give
the "waterlord" the incentive to take over more land by foreclosing on the
small farmers in debt to him. Thanks to his heightened prosperity, the
landowner can now buy an imported tractor, eliminating desperately needed
jobs for the village's landless families.
This and similar scenarios, endlessly repeated, entrench the already well
off and add to their incentive to fight demands for democratic control over
productive resources. In many countries, rich landowners are known to hire
thugs to intimidate and even murder villagers who dare to protest or
organize self-help cooperatives.
Only projects that reinforce the poor's initiatives to tackle the extreme
inequalities in power within the village have a chance of improving the
lives of the majority. However, most governments are unlikely to look
kindly on such activities, for fear of antagonizing powerful elites.
But we hesitate even to use this space to question the possibility of
government-sponsored development projects helping the poor within
elite-dominated societies. To do so may mislead, for it is so easy to lose
sight of the big picture.
No matter how sensitively designed the aid project, prospects for the poor
majority-whether they will have land, jobs, food, and economic
security-hinge largely on forces outside their villages. To whom is their
government accountable? To whom are international bankers who make loans to
their government accountable? And what about the corporations dominating
trade in their country's exports? Such questions point us to what we call
the iceberg. Foreign aid is only the tip.
Focusing only on official aid can blind us to many other ways we citizens
of the United States are linked to the lives-and hopes-of the hungry. We
need to take responsibility not just for what our government does in the
name of "aid" and otherwise-but also for what corporations and other
institutions based in our country do (often supported directly or
indirectly by our "aid" and other subsidies).
The iceberg is the action of the private sector-transnational corporations,
investors, and currency speculators-and the less visible actions of the
United States and other Northern governments to support their free rein in
the third world. Some forty thousand corporations control two-thirds of
global trade in goods and services, and most of that is in the hands of
only a few hundred corporate giants.57 In 1995, for example, General
Motors' sales were greater than the gross national product of 169
countries, including Saudi Arabia, South Africa, Malaysia, and Norway.58
In the last few years, there has been a tremendous increase in private
foreign investment, concentrated in the wealthier developing countries. The
World Bank reports that the overall volume of private-capital flows to
developing countries quadrupled in the first half of the 1990s, accounting
for three-quarters of all long-term flows to developing countries.59 While
governments are backing out, private investors are taking their place.
Private investment has become the main source of external financing for
many middle-income countries, though the majority of low-income countries
still rely primarily on official sources of financing.60 That may yet
change as corporations seek virgin territory for new investments.
In 1996 the Clinton administration announced plans to boost the 8 percent
U.S. share of the sub-Saharan Africa market, meager in comparison to
Europe's 40 percent share.61 The United States is using free-trade language
to argue that Africa, the "last frontier of American business,"62 should
open up to greater U.S. trade and investment.63 Key, high-profit sectors of
African economies, such as infrastructure (roads, telecommunications) and
mining are targeted.64 In June of 1997, at the G-8 Africa Summit in Denver,
reminiscent of the famous 1883 Berlin Conference scramble for Africa, the
future of African trade was discussed by the Northern countries, in the
conspicuous absence of African delegates.65
Over and above its foreign aid program, through numerous other public
channels (not to mention covert ones like the CIA), the U.S. government
supports policies that promote business interests, often in ways
diametrically opposed to the interests of the hungry.
U.S. government agencies like the Export-Import Bank (EXIMBANK) and the
Overseas Private Investment Corporation (OPIC) can have a greater impact on
the economy and policies of a third world country than official U.S.
foreign aid, although few Americans have ever heard of them. Both offer
financing and loan guarantees-backed by U.S. taxpayers-to finance exports
of goods and services. In accordance with the turn toward greater private
capital flows relative to official aid, EXIMBANK loans, guarantees, and
insurance rose from $12 billion in 1980 to $53 billion in 1995,66 more than
five times greater than total U.S. foreign assistance.67 In more than one
case of corporate welfare, EXIMBANK largely backs the efforts of
transnational corporations like Boeing, General Electric, and Westinghouse
to penetrate overseas markets and outcompete local companies. Small
U.S.-based businesses receive only 12-15 percent of EXIMBANK financing.68
In the mid-1990s OPIC supported $84 billion of investments by U.S.
corporations in 140 countries and played a key role in the corporate
takeover of the former Soviet bloc countries in Eastern Europe.69
Whether U.S. foreign aid can benefit the hungry depends on how our
government defines our national interest. Thus, a first step in putting
ourselves on the side of the hungry is to work to change our government's
definition of our national interest. Less control-less striving to make the
world conform to the U.S. model and respond to U.S. fears-would actually
mean more security for all.
After years of studying our foreign aid program, we have learned that
foreign aid is only as good as the recipient government. Foreign aid only
reinforces the status quo. It cannot transform an antidemocratic process
working against the majority into a participatory government shaped in its
interests. Where the recipient government answers only to a narrow economic
elite or foreign corporations, our aid not only fails to reach the hungry,
it girds the very forces working against them.
We do not suggest that we simply abolish foreign aid. The accumulated debt
"owed" to the third world by Northern countries for centuries of unbridled
profit taking through conquest, colonialism, mineral and other natural
resource extraction, unequal trade, labor exploitation, and other forms of
corporate pillage is too great to say nothing should be sent back.70
The problem is how to give something back, since as we've seen in this
chapter, even the best-intentioned humanitarian aid can have negative
consequences if the recipient government is based on elite local and
foreign interests.
An immediate step that we as citizens can take is to tell our
representatives that the best use for our money is not supporting the
status quo but alleviating the largest economic barrier to true development
in the third world-its foreign debt.
The combined debt of third world countries reached almost $2 trillion in
1996.71 The bulk was accumulated largely as a result of Northern
banks-flush with the "petrodollars" deposited with them by oil-producing
countries in the 1970s-needing to place an unprecedented volume of loans.
Once developed countries were "borrowed out," the banks turned to the third
world, like snake-oil salesmen, selling huge loans for megaprojects that
many knew would never pan out. The structural adjustment programs of the
1980s and 1990s have been designed in part to induce the third world to pay
off that debt; the IMF and World Bank acting out the role of debt
collectors for private banks. In various refinancing agreements, the debt
owed to private banks has been assumed by agencies like the IMF, who are
ultimately funded by taxpayers, and to whom much of the debt is now owed.72
That debt-for which the lenders bear as much or more responsibility than
the borrowers, is now stifling economic development and social services
throughout the third world. Repayments from Zambia to the IMF between 1991
and 1993 were $335 million, compared to $37 million spent on primary
education. In Honduras, annual debt payments exceed the amount spent on
health and education combined.73
In fact, annual interest payments alone by all third world countries
amounted to $81 and $85 billion in 1994 and 1995, respectively, roughly
equal to the $80 and $90 billion they received in total direct foreign
investment and easily outstripping the $48 and $64 billion they received in
total development assistance from Northern countries. Total debt payments
(principal plus interest) were $190 and $213 billion in the same years,
greater than the sum of investment plus assistance.74
Our institute and two hundred other organizations have joined together in
the 50 Years is Enough Campaign against the IMF and the World Bank. These
two institutions, which celebrated their fiftieth anniversaries in 1994,
play key roles in policing the third world's debt. The campaign calls for
debt relief for third world countries. Aid dollars could be made into
something positive and noninterventionist if they were spent on debt
relief-as long as they were not tied to structural adjustment-like
conditions, which are so onerous for the poorer majorities.
One could argue that such unconditional debt relief might not end up
benefiting the hungry, either-because most third world governments do not
truly represent their poor majorities. This is a legitimate concern-yet, in
the end, if we have learned anything, it is that real change starts with
people themselves. Our job is to not block that change through conditional
aid, or equally conditioned debt relief, that mandates the strengthening of
a status quo in which the rich get more powerful and the poor more
marginalized. If we allow our government and major lending institutions to
"get a foot in the door" by agreeing that debt relief be conditioned-with
our conditions, of course-we will most likely see the conditions distorted
to meet ends other than those we support, just as has happened with
originally well-intentioned foreign aid.
Rather, we must make our government and corporations stop blocking
change-that is perhaps the most important step in making real change
possible in third world countries. As individuals, and through the
organizations we belong to, we can also support the movements of local
people to bring about change on their own terms. We should not think or act
as though we know better than they-or that we can or should tell them what
to do or how to do it.
Understanding the nature of U.S. foreign aid-that it does not, and in most
countries, cannot, help the hungry-does not lead necessarily to a
there's-nothing-I-can-do dead end. It is actually the first step in
perceiving the many and varied actions open to all who are determined to
end world hunger. In our concluding essay, and in the other publications of
our institute, we offer suggestions as to how to seize the opportunities
all around us.
World Bank, World Development Report 1995 (New York: Oxford University
Press, 1995), table 18.
2. The twenty-one rich OECD countries have substantially reduced their aid
budgets, which in 1994 reached their lowest point in over twenty years.
Earthscan, The Reality of Aid: An Independent Review of International Aid.
(London: Earthscan Publications, 1996) 17.
3. U.S. Agency for International Development, Congressional Presentation
Fiscal Year 1996 (Washington, DC: USAID, 1995), table AFD_CP.XLS.
4. George Shultz, "Foreign Assistance Request for FY 1986," Current Policy,
no. 656 (U.S. Department of State, Bureau of Public Affairs, Washington,
DC, February 19, 1985).
5. For a discussion of Cold War U.S. aid policies, see the previous edition
of this book, Frances Moore Lappˇ and Joseph Collins, World Hunger: 12
Myths (New York: Grove Weidenfeld, 1986), chapter 10; see also Frances
Moore Lappˇ, Rachel Schurman, and Kevin Danaher, Betraying the National
Interest: How U.S. Foreign Aid Threatens Global Security by Undermining the
Political and Economic Stability of the Third World (New York: Grove Press,
1987); and Frances Moore Lappˇ, Joseph Collins, and David Kinley, Aid as
Obstacle: Twenty Questions about Our Foreign Aid and the Hungry (San
Francisco: Institute for Food and Development Policy, 1981).
6. See Peter Rosset, "Overseas Rural Development Policy" in Global Focus: A
New Foreign Policy Agenda 1997-1998, ed. Tom Barry and Martha Honey
(Albuquerque and Silver City: Interhemispheric Resource Center and
Institute for Policy Studies, 1997), 55-56; and Michael E. Conroy, Douglas
L. Murray, and Peter M. Rosset, A Cautionary Tale: Failed U.S. Development
Policy in Central America (Boulder: Lynne Rienner/Food First Development
Studies, 1996), chapter 3.
7. USAID Developments (Summer 1997), 4.
8. Ibid., 1.
9. U.S. Agency for International Development, Congressional Presentation
Fiscal Year 1996.
10. U.S. Agency for International Development, Congressional Presentation
Fiscal Year 1996; calculated with country ranks from U.S. Central
Intelligence Agency, World Fact Book 1995 (Washington, DC: Central
Intelligence Agency, 1995).
11. Rosset, "Overseas Rural Development," 54.
12. Conroy, Murray, and Rosset, A Cautionary Tale, 70-79.
13. Ibid., table 3.1.
14. Ibid., 76.
15. Ibid., 77.
16. Rosset, "Overseas Rural Development"; Walden Bello with Shea Cunningham
and Bill Rau, Dark Victory: The United States, Structural Adjustment and
Global Poverty (London: Pluto Press/Food First Books/Transnational
Institute, 1994).
17. USAID Congressional Presentation Fiscal Year 1996.
18. U.S. Department of Agriculture, U.S. State Department, and U.S. Agency
for International Development, The U.S. Contribution to World Food
Security: The U.S. Position Paper Prepared for the World Food Summit
(Washington, DC: U.S. Department of Agriculture, 1996), 4.
19. U.S. Agency for International Development, USAID Annual Food Assistance
Report, 1996 (Washington, DC: USAID, 1996), Budget Annex A-1.
20. See Li Kheng Poh and Peter Rosset, "New Food Aid: Same as the Old Food
Aid?" Food First Backgrounder (Winter 1995), for definitions of the
different kinds of food aid. See also Lappˇ, Collins, and Kinley, Aid as
Obstacle.
21. Rachel Garst and Tom Barry, Feeding the Crisis: U.S. Food Aid and Farm
Policy in Central America (Lincoln: University of Nebraska Press, 1990),
53.
22. USAID, USAID Annual Food Assistance Report, 1996, 53.
23. Rachel Szego, "Cargill, Incorporated: Building a Worldwide Presence,"
FIAN Fact Sheet (FoodFirst Information Action Network, 1997): 2-3.
24. See discussions in Lappˇ, Schurman, and Danaher, Betraying the National
Interest; and Lappˇ, Collins, and Kinley, Aid as Obstacle.
25. Lappˇ, Collins, and Kinley, Aid as Obstacle, chapter 12, 95.
26. Garst and Barry, Feeding the Crisis, 54.
27. Food Security Act of 1985, cited in Ibid., 210-211, n. 50.
28. USAID, USAID Annual Food Assistance Report, 1996, Budget Annex, A-9-10.
29. Ibid., A-1.
30. Ibid.
31. Lappˇ, Collins, and Kinley, Aid as Obstacle, 113.
32. Rehman Sobhan, Agrarian Reform and Social Transformation: Preconditions
for Development (London: Zed Books, 1993), 113-114.
33. Program on Peacekeeping Policy, United Nations Operations in Somalia,
Part II (Washington, DC: Institute of Public Policy, George Mason
University, 1994), 2.
34. See Li Kheng Poh and Peter Rosset, "New Food Aid: Same as the Old Food
Aid?"; and Michael Maren, The Road to Hell: The Ravaging Effects of Foreign
Aid and International Charity (New York: Free Press, 1997).
35. Poh and Rosset, "New Food Aid: Same as the Old Food Aid?" 5.
36. USAID Annual Food Assistance Report: 1996, chapter 3, 20, 26.
37. Michael Maren, "Good Will and Its Limits in Somalia," New York Times,
August 27, 1993, A29; also, interview with Michael Maren conducted by Li
Kheng Poh on May 12, 1995.
38. Lappˇ, Collins, and Kinley, Aid as Obstacle, chapter 15.
39. Poh and Rosset, "New Food Aid: Same as the Old Food Aid?" 4; Tony
Jackson with Deborah Eade, Against the Grain: The Dilemma of Project Food
Aid (Oxford: OXFAM, 1982), chapter 8.
40. Michael Maren, "Good Will," A29. See also Michael Maren, The Road to
Hell.
41. "Military Aid Legislation," Arms Sales Monitor, no. 36 (February 1998):
1; U.S. Agency for International Development, The USAID FY 1998
Congressional Presentation, Summary (Washington, DC: USAID, 1998).
42. Congresswoman MacKinney at "Joint Hearing Before the Committees on
International Security, International Organizations and Human Rights and
International Operations," House of Representatives, Committee on Foreign
Affairs, 103rd Congress, November 9, 1993 (Washington, DC: U.S. Government
Printing Office, 1994), 4.
43. "Introduction: A Second Chance," pp. 1-7 and Barry and Honey, Global
Focus, 5.
44. Ibid.
45. David Isenberg, "Arms Trade" in Barry and Honey, Global Focus, 94.
46. See Douglas L. Murray, Cultivating Crisis: The Human Costs of
Pesticides in Latin America (Austin: University of Texas Press, 1994),
110-112.
47. See Joseph Collins with Frances Moore Lappˇ, Nick Allen, and Paul Rice,
What Difference Could a Revolution Make? Food and Farming in the New
Nicaragua, 2nd edition (San Francisco: Food First Books, 1985); and Peter
Rosset and John Vandermeer, Nicaragua: Unfinished Revolution: The New
Nicaragua Reader (New York: Grove Press, 1986).
48. See Conroy, Murray, and Rosset, A Cautionary Tale, chapters 1 and 3.
49. Joint Ministerial Committee of the Boards of Governors of the World
Bank and the International Monetary Fund on the Transfer of Real Resources
to Developing Countries (also known as the Development Committee), Aid for
Development: The Key Issues (Washington, DC: World Bank, 1985), 41. In the
section of this report entitled, "Aid and the Poor," the Development
Committee concedes that "rural development programs have usually been
unable to benefit 'the poorest of the poor,' i.e., the lowest 20 percent or
so of the rural income distribution."
50. "A Synthesis of AID Experience: Small-Farmer Credit, 1973-1985," USAID
Evaluation Special Study no. 41, (Washington, DC, October 1985) 11.
51. Conroy, Murray, and Rosset, A Cautionary Tale, chapter 2.
52. Ibid., 37; see also Peter Rosset, "Sustainability, Economies of Scale
and Social Instability: Achilles Heel of Non-Traditional Export
Agriculture?" Agriculture and Human Values 8, no. 4 (1991): 30-37.
53. Conroy, Murray, and Rosset, A Cautionary Tale, 39.
54. Ibid., 41.
55. Ibid.
56. Marc J. Cohen, "United States" in The Reality of Aid 1996: An
Independent Review of International Aid, ed. Judith Randel and Tony German
(London: Earthscan, 1996), 194.
57. Erik Leaver and John Cavanagh, "Controlling Transnational Corporations"
in Barry and Honey, Global Focus, 41.
58. Ibid.
59. World Bank, World Debt Tables, 1994-95 (Washington, DC: World Bank,
1996).
60. Ibid.
61. Richard Lawrence, "Clinton's New Plan for Africa" Journal of Commerce
(February 15, 1996), 6-A.
62. So-called in the U.S. policy document titled Comprehensive Trade and
Development Policy for the Countries of Africa, quoted in Tetteh Hormeku,
"US-Africa Trade Policy: In Whose Interest?" in African Agenda (Accra,
Ghana: Third World Network Africa Secretariat, 1997).
63. The Growth and Opportunity Bill in the U.S. Congress establishes a
series of criteria that condition eligibility of a country to "benefit"
from these policies to its performance of a series of "free-market"
reforms. These criteria include World Trade Organization membership;
promotion of free movement for goods, services, and factors of production
in and out of the country; and protection of property rights (Hormeku,
"US-Africa Trade Policy," 6).
64. See Hormeku, "US-Africa Trade Policy," 4, 5.
65. See, for example, John William Templeton, "Africa Needs a Seat at the
World's Economic Table," San Francisco Examiner, June 9, 1997.
66. George Kourous and Tom Barry, "Export-Import Bank" in Barry and Honey,
Global Focus, 33.
67. Cohen, "United States," 194.
68. Kourous and Barry, "Export-Import Bank," 34-35.
69. Janice Shields, "Overseas Private Investment Corporation" in Barry and
Honey, Global Focus.
70. For a recent attempt to estimate the magnitude of capital flows from
Southern to Northern countries, which far outweigh total North-South flows,
see Martin Khor, "South-North Resources Flows and Their Implications for
Sustainable Development," Third World Resurgence, no. 46 (1994): 14-25.
71. United Nations, World Economic and Social Survey 1997 (New York: United
Nations, 1997), table A. 36.
72. See Susan George, A Fate Worse Than Debt: The World Financial Crisis
and the Poor, revised and updated edition (New York: Grove Weidenfeld/Food
First Books, 1990).
73. Oxfam International, "Oxfam International Calls for Action on
Multilateral Debt," press release (Washington, DC: Oxfam International,
February 20, 1996).
74. Debt payment figures from United Nations, World Economic and Social
Survey 1997, table A. 37; direct foreign investment and development
assistance figures from World Bank, World Debt Tables 1995 (Washington, DC:
World Bank, 1995), table 1.
75. 50 Years Is Enough, 1025 Vermont Avenue, NW, Suite 300, Washington, DC,
20005, USA, [EMAIL PROTECTED]
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