The Scandal That Is Foreign Aid
Just two weeks after the US Embassy in Egypt was ransacked by
terrorists and a band of Egyptian thugs, President Obama announced that
he would provide Egypt’s new Muslim Brotherhood government with an
emergency infusion of $450 million in US aid.
Two weeks may be too long for the Administration to remember these
things, but Obama’s announcement came just hours after Egypt’s new
president Morsi delivered, from the podium of the UN General Assembly, a
37 minute pro-Palestinian anti-Israeli rant, in which he appealed to
the United Nations to use its “principal responsibility” to help stem
free speech that might offend what Islamic sanctities hold sacred. In
other words, he called to rein in the hated American people’s ability to
say and write what they like – or, put another way, attack the First
Amendment to the US Constitution.
Within hours of Obama’s announcement, Congressional Republicans, led
by Kay Granger of Texas, Chairman of the House Appropriations
Subcommittee that oversees foreign aid, raised enough of a stink to slow
it down, if not derail it permanently.
Egypt has received more US foreign aid, since 1979, than any country
except Israel – about $2 billion a year (and excluding military aid to
Iraq and Afghanistan). After Egyptians overthrew former President Hosni
Mubarak last year and installed the Muslim Brotherhood, the Obama
Administration pledged an extra $1 billion to bolster the new
government’s transition to democracy, largely to relieve Egypt’s debts
to the United States. The $450 million Obama pledged last week is
intended to further relieve Egypt’s faltering economy and would be in
addition to a $4.8 billion loan to Egypt from the International Monetary
Fund.
Obama’s new Egyptian pledge is just a drop in the bucket in a $19
billion boondoggle that is so laden with corruption and waste that the
entire enterprise should be a public outrage, and it ought to be
abolished or completely restructured.
Former Reagan-era Ambassador Eugene Douglas, who has visited Africa
dozens of times both as a diplomat and as a businessman, and who has
closely observed US foreign aid and its impact for years, told me, “the
system is rotten and has become just another piggy bank for the ‘one
world’ progressive college graduates who find it so uplifting to act out
fantasies with taxpayer funds and virtually no practical
accountability.”
US foreign aid is no stranger to criticism. It was originally
intended to promote US foreign policy but is increasingly used for
political and humanitarian purposes which often have little to do with
American interests. It is questionable whether it has any positive
impact on US foreign policy; nobody knows how much of what we send
abroad is stolen, converted to another use, or actually reaches its
intended destination.
The US Agency for International Development (USAID), the State
Department entity that administers foreign aid, has admitted that it
really has no idea how much US taxpayers’ money is used for its intended
purpose and how much lines the pockets of corrupt politicians or winds
up in Swiss banks. According to USAID’s Inspector General, the agency
failed, in 2009, to conduct mandatory annual audits of about $500
million in funds transferred to 52 foreign countries because “it was
unable to produce an inventory of all organizations it gives money to.”
People familiar with the way USAID works believe the Inspector General’s
comment is vastly understated.
Excepting Israel, eight countries receiving the most US foreign aid
are the eight most corrupt countries in the world – Sudan, Kenya,
Pakistan, Uganda, Nigeria, Ethiopia, Egypt, and Columbia, according to
www.AIDMonitor.com, a watchdog group. Even worse, nobody has any idea whether US aid actually does further US national security interests. A
2006 report
from the Government Accountability Office, for example, criticized both
the State Department and the Defense Department for failing to measure
how the funding actually contributes to U.S. goals.
One thing US aid does not do is instill any sort of loyalty to the
United States. During September of this year, anti-US demonstrations
unfolded in 29 countries, all with large Muslim populations. Those 29
countries received, over three years between 2008 and 2010, a total of
$29 billion dollars in assistance from the US (excluding Iraq and
Afghanistan, which between them received $44 billion over the same
period). And did any of those countries support us in their votes in the
United Nations? Only one – Turkey – voted, during 2011, with the US
more than half the time, and only four – Georgia, Ukraine, Peru, and El
Salvador – more than 25%.
Or how about Bashar Assad’s Syria, one of the most repressive regimes
in the region engaged in killing tens of thousands of its own innocent
civilians, including women and children, and who is host to a regular
infiltration base for jihadists into Iraq – jihadists whose calling is
to murder US soldiers. Over the past three years, Syria received $84
million in US aid.
And what does the Obama Administration want to do about it? Give them
more money. In a speech last week to the Group of 8 Nations in New
York, Secretary of State Hillary Clinton said we needed to provide more
support to governments that have emerged from the Arab Spring, citing
specifically Egypt, Libya, and Tunisia.
Corruption has always been the bane of foreign aid. Consider Sudan, a
sub-Saharan country that gets close to $1 billion a year and which
ranks first on the list of corrupt governments. A researcher for the
Council on Foreign Relations reported just a couple of months ago:
[S]ince 2005, [Sudanese] state officials and government contractors have stolen an estimated $4 billion
from treasury coffers—an amount equivalent to 30 percent of the
country’s annual economic output. In a particularly egregious example,
the Ministry of Finance and Economic Planning squandered millions of
dollars as grain contracts, meant to stave off an anticipated food
shortage, was instead awarded to shell companies.
The African Union estimated as long ago as 2002 that corruption of
foreign assistance was costing the continent $150 billion a year. Since
then it has only gotten worse.
Nobody really knows how much aid money just disappears, but it is a
sizable part of the budget. Perhaps even worse, a large portion of aid
is administered through “Beltway Bandit” contractors, enriching former
bureaucrats with the money intended for poverty-stricken and destitute
parts of the world. These firms administer a great percentage of USAID
money and; together with their army of high-priced and well-connected
Washington lobbyists, lawyers, public relations experts, accountants,
and money managers; keep international aid at levels way beyond where it
should be, and for purposes that have little to do with US national
security or humanitarian needs. Call them, if you will, the
international poverty pimps, whose mission is to do well by making
Congress think they are doing good.
These are not small entrepreneurs undertaking little projects in the
African bush. Ten American for-profit government contractors each
received over $200 million from USAID last year and together received
$3.19 billion to administer “development” projects; those companies are
often run and staffed by former USAID employees under what might be
described as a second retirement system. By the time they take out their
overhead, fees for the lawyers, lobbyists and public relations
specialists, conduct environmental and feasibility studies, pay for
first class travel for inspection visits and to attend high-end
conferences at the world’s best watering holes, little of the taxpayers’
money is left to do what the dollars were intended for.
Worse, these Beltway bandits become a breeding and feeding ground for
left-leaning, progressive, anti-capitalist do-gooders to spread their
gospel among the downtrodden countries of the world. To its credit, the
Obama Administration has at least argued that the contractors’ roles
should be reduced, although little has actually happened. And USAID is
itself virtually incapable of running the projects, meaning without the
middle men, it is likely that even more of the money would disappear.
A case in point is a 120 mile-long road built in South Sudan with
USAID money last year connecting Jubo, the capital, with Uganda – the
only paved road in the country – by the Louis Berger Group, a
multi-million dollar international government contractor. The initial
budget was $87 million, but the project wound up costing $225 million,
most of which went to non-Sudanese contractors.
According to former US Diplomat Eugene Douglas, now a regular visitor
to South Sudan and involved in several companies doing business there,
"it would have been far better, instead of building just one $225
million road, to have built a gravel road, using local contractors and
at a fraction of the cost, and repaired hundreds of miles of feeder
roads, essential to provide access to markets and other services by the
bulk of the population.” But USAID officials just don’t think that way.
Although US foreign aid may be very good for the contractors, it is
very bad for poor countries – or at least the general population of poor
countries. Economist Dambisa Moyo, a native of Zambia and an expert on
foreign assistance in Africa wrote recently in
The Wall Street Journal that
over the past 60 years some $1 trillion has been transferred from
Western countries to Africa. But real per-capita income is lower today
than it was in the 1970s, and more than one half of the population of
the entire continent lives on less than one dollar a day – nearly twice
the number of 20 years ago.
Moyo makes no bones about the fact that foreign aid is “an
unmitigated political, economic and humanitarian disaster… it has made
the poor poorer, and the growth slower. It has left African countries
debt-laden, inflation-prone, vulnerable to the vagaries of the currency
markets and unattractive to higher quality investment.”
With that indictment, should we be surprised that Obama wants to throw even more money at it?
