Like so many government programs today, America’s foreign assistance is ineffective and counterproductive.
In many places, our aid programs fuel corruption, socialism and anti-American sentiment. In others, they merely fail or are linked to goals that are ill defined or ill conceived. And matters could get even worse. The Obama administration has released a 240-page strategy for diplomacy and development that boils down to the quest of bureaucrats from time immemorial: more power and more money. In other words, more of the same.
Sadly, this need not be the case. A more focused, smaller and cheaper effort centered on building larger middle classes in a few key foreign areas would be far more useful to U.S. interests. It would not be the first time we have done this either, but it would require a departure from business as usual by Washington’s feckless foreign policy establishment.
Efforts to improve foreign assistance are nothing new. In 1961, President Kennedy lamented to the Congress that “no objective supporter of foreign aid can be satisfied with the existing program… Bureaucratically fragmented, awkward and slow, its administration is diffused over a haphazard and irrational structure… Its weaknesses have begun to undermine confidence in our effort both here and abroad.”
Half a century later, matters are actually worse. Last month, the Obama administration issued its first ever “Quadrennial Diplomacy and Development Review.” Secretary of State Hillary Clinton modestly described the document as a blueprint for “the combined force of all of the civilians across the United States Government who practice diplomacy, carry out development projects, and act to prevent and respond to crisis and conflict.” The document will help “change the world through ‘civilian power,’” because according to Secretary Clinton, “[l]eading through civilian power saves lives and money.”
But the document unintentionally captures what is wrong with our foreign assistance. In a classic placement of the cart before the horse, the document outlines numerous existing programs and policies and tries unsuccessfully to work backward to a coherent strategy, rather than vice versa.
The Obama administration refuses to overhaul a foreign assistance regimen of economic, security and military aid that currently provides, for example, $3.6 billion a year to Pakistan and another $1.6 billion to Egypt.
Both of these Muslim-majority countries are ruled by corrupt governments that at times work against U.S. interests, and which directly and indirectly fuel Islamism and its downstream product of terrorism. Pakistan employs violent jihadists outright. As a result, it is extremely difficult to argue that this aid is advancing U.S. interests or making the American people safer from foreign threats.
The economic portions of that assistance amount to approximately $1.6 billion for Pakistan and $250 million for Egypt. This aid focuses on development projects, especially those involving infrastructure and poverty reduction, typical of the establishment approach to foreign assistance over the last half century. The corrupt government in question often administers such programs in part or in whole. By promoting a central role for government, the aid often means we are exporting socialism rather than encouraging private wealth creation and free markets.
A better effort would enlarge the middle class, which is the chief constituency of democracy, reform and less corrupt government. Building larger middle classes abroad will not solve all of the challenges facing the U.S., but would almost certainly better serve our interests and make better use of taxpayer dollars.
Pursuing this strategy would hardly be novel: the U.S. has, at times in its past, been successful at doing precisely this very thing. Most notably, the Enterprise Funds deployed after the collapse of the communist Eastern Bloc in Europe helped build middle classes and support the pillars of free market economies and democratic governments. They did so by aiding private-sector small-and medium-sized businesses that in turn employed middle-class workers, generated private wealth, and created large constituencies for ongoing reform. Some of the Funds made profits and actually returned money to the Treasury—shocking for a government program.
Recently, the Hamilton Foundation, where I serve as president, analyzed the success of these programs and outlined how they could be used today in select geographies.
There are would-be reformers within each agency in Washington, including those of the kind who fielded innovative and effective solutions like the Enterprise Funds. But they are stifled in Mr. Obama’s Washington by poor leadership content with the failing status quo.
Contrary to the conventional wisdom in Washington, the U.S. needs to spend less, not more on foreign assistance. We need to get our head in the game, with programs designed to fight the key threats America faces today: Islamism and its terrorist spawn, the Iranian regime, China’s bullying government, and select tyrants and kleptocrats. Then we need a small number of foreign aid programs designed to build constituencies that will help us fight those threats. We’ve done it before and we ought to do it again.