Let Countries That Scorn Us Compete For Trade, Not Aid

By Jon Kraushar Communications Consultant

If the guiding principle of the Obama Administration really is "you never want a serious crisis to go to waste," then in our economic crisis shouldn't countries that revile America compete for trade, not foreign aid -- especially when they overwhelmingly vote against us in the United Nations?

Although we won't know the full details of his new budget until April, President Obama previously pledged to double foreign aid--to $50 billion a year. Hopefully, the president will come to his senses at a time when we're facing a $1.75 trillion deficit and the worst recession in over a quarter of a century.

Just contemplate the fact that the Obama Administration was more prompt in announcing aid to a hostile, Hamas-controlled regime than to small businesses

Consider this contrast: Secretary of State Hillary Clinton two weeks ago pledged about $900 million in aid to the Palestinians -- those wonderful folks who want Israel destroyed and who danced in the streets with joy after 9/11. Yet Obama has just announced his plan to spend $730 million (20 percent less than on the Palestinians) to reduce small-business lending fees and to increase the government guarantee on some Small Business Administration loans to 90 percent.

Put aside that a study by the Government Accountability Office -- the congressional watchdog agency -- finds that there's inadequate oversight for the federal guarantee on those small business loans.

Just contemplate the factthat the Obama administration was more prompt in announcing aid to a hostile, Hamas-controlled regime than to small businesses, about which Obama has just said,"Small businesses don't just provide jobs, they provide the innovations that help us lead in the global economy."Indeed, Obama concedes that 70 percent of new jobs created are by small businesses.

True, Obama positions the $730 million as part of a plan to boost bank liquidity with up to $15 billion aimed at unfreezing the secondary credit market. If successful, this would help small businesses.However, $15 billion is still only 30 percent of the possible $50 billion in foreign aid Obama stated as his goal.

A chunk of foreign aid goes to America's most steadfast friend: $2.4-billion in 2008 to Israel, which voted with the U.S. in the United Nations 89 percent of the time, according to one study. That's more than four times the percentage of U.N. support we got from the United Kingdom and Australia. Yet American aid in 2008 to Egypt was $1.7 billion even though the same study found Egypt voting againstthe U.S. in the United Nations 86 percent of the time.

We spent billions (and our soldiers died) saving Kuwait in the 1990-91 Gulf War, yet Kuwait voted against us 86 percent of the time in the U.N. In 2008, Jordan got $464 million in economic and military aid from the U.S. while voting against us in the U.N. 88 percent of the time. If Obama doubles foreign aid will these foreign countries and others that excoriate us be rewarded with even more money that could otherwise help us at home?

What kind of return do we realize on our investments in foreign aid? A new book called "Dead Aid" by Dambisa Moyo, an African woman with a Harvard master's degree and an Oxford Ph. D. in economics, argues that "systemic aid," a.k.a. government-to-government or World Bank-type aid (unlike emergency aid), "has been, and continues to be, an unmitigated political, economic and humanitarian disaster for most parts of the developing world."

Moyo says the "pity" mentality of such aid to Africa has corrupted not only African leaders but also African culture and African efforts at economic self-improvement. She says Africa's models should be China and India, which have developed trade, created a business environment for foreign direct investment and used microfinance and international bond markets to grow.

Moyo is particularly disapproving of what she calls the "glamour aid" promoted by celebrities like Bob Geldorf and Bono. She says, "They just reinforce negative perceptions of the continent. It's not helpful at all."

Moyo calls for phasing out systemic aid over the next five years so Africa will be forced to reform the dependency she says is crippling it. Of course, many of these African countries are in league with others that in the U.N. condemn the primary hand that feeds them -- the United States.

Next month, when the details of Obama's foreign aid budget are presumably revealed, let us remember that we "never want a serious crisis to go to waste." Let's speak up to reform foreign aid so that it enables trade and economic development rather than dependency, dysfunction and disdain by countries that have one hand out to take our money and the other hand out to slap us across the face.

Communications consultant Jon Kraushar is at www.jonkraushar.net.

Communications consultant Jon Kraushar is at www.jonkraushar.net. He is a consultant to corporate and political leaders including Steve Forbes.