Part I:

The Historical Legacy

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Chapter OneThe Nature of this Book

Mrs. Jellyby...is a lady of very remarkable strength of character [who] is at present (until something else attracts her) devoted to the subject of Africa, with a view to the general cultivation of the coffee berry-and the natives-and the happy settlement, on the banks of the African Rivers, of our superabundant home population.1

Each [colonial] station should be like a beacon on the road towards better things, a center for trade of course, but also for humanizing, improving, instructing.2

[F]or the friendship which is gained by purchase and not through grandeur and nobility of spirit is bought but not secured….3

Where…avenues are closed – where the economic system will not give people bread, or where the political system will not permit them a hearing, or where the prestige arrangements afford them no chance of dignity – men will appeal to the sword.4

Foreigners have not helped us…. We have had many bad experiences. First the Spaniards, then the Russians and the Chinese. Now the United Nations and the French and the World Bank.5

Foreign Aid as Foreign Policy

1 Charles Dickens, Bleak House (New York: Signet, 1964), pp. 49-50. The book was first published in 1853.

2 Joseph Conrad, Heart of Darkness, quoted by Paul Theroux, Dark Star Safari: Overland from Cairo to Cape Town (New York: Houghton Mifflin, 2003), p. 156.

3 Niccolo Machiavelli, “The Prince,” in The Prince and the Discourses (New York: Random House Modern Library, 1950 edition), p. 61.

4 Edmund Stillman and William Pfaff, Power and Impotence: The Failure of America’s Foreign Policy (New York: Random House, 1966), p. 26.5

? According to an administrator in Equatorial Guinea quoted by Robert Klitgaard, Tropical Gangsters: One Man’s Experience with Development and Decadence in Deepest Africa (New York: Basic Books, 1990), p. 101.

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At the beginning of 2006, there was a great deal of discussion within the U.S. Agency for International Development about the future of foreign aid. Rumors abounded that USAID would be restructured, linked to U.S. military activities and folded into the Department of State, thus ending its forty five years as an independent agency. Andrew Natios, the then Administrator of USAID, announced his resignation effective January 13, 2006, ostensibly because of his concerns about the changes.

The new component of the Department of State would be headed by a Deputy Secretary of State for Development, (with the title of USAID Director), but perhaps shorn of much of its economic development functions. The Agency would be directed away from long term planning to short term goals targeting conflict resolution, cooperation with regard to security objectives, and transitional assistance. The rumors portended the likely end or fundamental realignment of more than a half a century of U.S. development assistance policy.6

This book hopes to provide an assessment of U.S. foreign aid policy at this critical juncture in order to contribute to the policy debates about future U.S. foreign policy in the twenty-first century. It looks at both policies and process and tries to place each in a historical context. The view expressed here is that foreign aid and foreign policy reflect broad cultural values of the donor, in this case, the United States, and that understanding foreign aid is a normative as well as an empirical exercise.

The legacy of post-war history as it has impacted upon foreign aid, was defined in the history of Europe and in European empires. There are two threads that define that history: that of state to state power relationships and that of the evolution of humanitarian non-governmental organizations. Though Europe has a history separate from the United States and other European settler countries throughout the world, the history of continental Europe is an important factor in the evolution of U.S. foreign aid policy.

Historically, many scholars of foreign aid have focused on issues of charity and self-interest. When official development assistance is given donor countries often use aid monies to seek out support for their own interests.7 Foreign aid was viewed by some as a moral obligation after World War II though historically too few scholars have examined foreign aid from an ethical viewpoint. Carol Lancaster has pointed out that foreign aid “was a response to world poverty which arose mainly from ethical and human concern[s]….”8 Des Gaper of the Institute of Social Studies in The Hague has taken on analysis of the ethnical debate over foreign aid.9

In reality, foreign aid continues to be used by donors for multiple purposes.10 There are five different views of foreign aid usually presented. The first, or idealist school, sees foreign aid in terms of moral obligations, arguing that the developed world is obligated to assist underdeveloped countries. A second, or realist school, sees foreign aid in terms of statecraft, or the economic instrument of power politics. Thirdly, the neo-Marxist school sees foreign aid as part of a historical underdevelopment process that has historically impoverished underdeveloped countries. Fourth, from a political economy perspective, foreign aid is seen as a support mechanism for the donor country’s trade and commercial interests. Finally, in the view of many critics, at best foreign aid should be seen as little more than a palliative that allows for the

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continuation of the current international economic system.11 Each of these issues will be addressed in the course of this book.

The approach here concurs with Vernon Ruttan who states, “Changes in U.S. [foreign] assistance policy respond to and are constrained by domestic political and economic interests and concerns.”12 This book examines the issues of U.S. foreign aid activities from both a policy and a normative dimension but also recognizes the importance of individual and human values that impact on policy. Most importantly, it uses history as its primary methodology. Understanding the history and context of foreign aid policy is as important as understanding technical formulas or a narrow calculation of cross-benefit analysis.

The Nature of Foreign Aid

In the twentieth century, U.S. foreign aid and technical assistance was “established on the premise that the developed world possessed both the talent and the capital for helping backward countries to development.”13 According to Carol Lancaster, “Foreign aid is…a voluntary transfer of public resources, from a government to another independent government, to an NGO, or to an international organization with at least a 25 percent grant element.”14 While it is not a policy, it is a tool of foreign policy and it also serves as a very strong symbol and signal to the international community.15 Intellectually, as Barbara Ward noted in her classic lectures in the 1960s, foreign aid was based upon the assumption of progress.16 From this assumption came another: that the developed country expert would have an unlimited ability to cope with underdeveloped country problems.17 By 1960, the assumption of progress was no longer a given.

Foreign aid as the term is used here consists of government to government and government to non-governmental organization assistance and includes both grants of money and concessionary (less than market rate) loans, the provision of goods and services, and technical assistance. The latter includes consulting, service support, education and training. Following Davis Bobrow, the author assumes that this includes situations “where there is at least some element of choice and discretion on the part of those executives who are being advised.”18

Foreign aid can be defined as the transfer of any resources from wealthy countries to poor countries on sub-market terms.19 According to George Luksa, foreign aid is an extension of diplomacy and an alternative to sanctions, conflict, intervention and war.20 In the twentieth century, foreign aid has been used for a multiplicity of purposes, diplomatic, security, cultural, developmental, humanitarian relief, and commercial reasons as well as at the end of the Cold War promoting economic and social transitions in former socialist countries, promoting democratic governance, mediating conflicts and managing post-conflict transitions and addressing environmental problems.21 The use of the term foreign aid here is meant to define these financial transfers from government sources. The term international assistance includes all aid that passes from one country to another whether it comes through governmental or private sources (unofficial grants, loans and other concessions).

18 Davis B. Bobrow, “Using Foreign Advice: Issues and Choices,” (Discussion Draft Paper, University of Pittsburgh, 1992), p.2.

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Paul Mosley defines foreign aid narrowly as “money transferred on concessional terms by the governments of rich countries to the governments of poor countries.”22 In this sense, though there was some financial or humanitarian assistance, prior to World War II, the first broad transfer of funds on a worldwide basis occurred with the Marshall Plan.23 Though the amounts were small prior to 1948, unlike most who write on foreign aid, I spend time here on the earlier period of international assistance and foreign aid because it both defined the values and parameters of contemporary foreign and established processes whereby such assistance would be granted.

Overall, the goal for a conceptual framework for supporting foreign aid should involve an enlightened but realistic optimism that deals equally with commercial, security and humanitarian concerns of donors in a manner that is non-threatening to the recipient nations. Traditionally, foreign aid has focused on at least three primary objectives: broadly based growth, an effective attack on poverty, and an end to the destruction of the physical environment of the world.24 The most common form of international aid is official development assistance (ODA) provided either by a single country or an international organization. Foreign aid as ODA characterizes the transfer of economic resources for political, social and economic development.

Technical assistance can be defined as the provision of professional assistance on a temporary basis to agencies of government that have specific technical problems.25 As used here this would also include technical assistance provided by donors to the private and the non-governmental sectors. Technical assistance has come to assume foreign involvement though the same principles apply to technical support provided within a country.26

Much of international technical assistance takes the form of providing technical specialists who are on direct contract with government agencies or with private and non-governmental organizations or foundations that provide services to foreign governments and organizations. The purpose of such technical assistance is often directed at institution building. Consulting, both long and short term is at the heart of the technical assistance and training processes and applied research skills are at the heart of consulting. The technical assistance expert is responsible to his/her client. However, under technical assistance, it is not always clear who the client is, the host country, its leadership and its program managers or the donor agency and its contracting and program officers.

There are really four components to foreign aid policy: physical infrastructure development, support for social and economic development, humanitarian and security assistance, and support for democratic governance and political development. Governance and political development are important. As early as 1950, advocates of foreign aid made it clear that democratic governance was essential for development aid to succeed.27 Increasingly, it has been a concern for the establishment of an international legitimacy for democracy, which has

25 Rowland Egger, “Technical Assistance at Home and Abroad,” in Institutional Cooperation for the Public Service: Report of a Conference Chicago: Public Administration Service, 1963), p. 47.

26 Ferrel Heady, “Report,” in Institutional Cooperation for the Public Service: Report of a Conference Chicago: Public Administration Service, 1963), p. 58.

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predominated at least conceptually in foreign aid debates. However, there is evidence that foreign aid if it is inappropriately provided can make institutional and governance problems much worse.28

The Importance of Institutional Development

Foreign aid is said to hold the promise of institutional development, that is the building of structures and processes capable of introducing and supporting the changes implied in the term modernization. To its critics however, foreign aid has often lacked an adequate conceptual basis, beyond the somewhat imprecise term, “modernization.”29 Like other foreign policies, foreign aid policy has sometimes suffered from an absence of reality among both advocates and critics.

When problems and conflicts exist among peoples, they are not always solvable by foreign military forces or modernization technologies. In foreign aid, nation-building based on assumptions of reason and rational decision-making has been the most presumptuous of such illusions.30 The importance of reason in decision-making follows from this since reason “affects everything within reach – citizens, society, [and] civilization.”31

Michael Maren makes three claims about the origins of foreign aid. First, he says development policies had their origins in the colonial systems that ruled most of the world prior

6 This information was taken from “Notes from an Interaction Meeting on Restructuring” with USAID Director Andrew Natsios, December 14, 2005. Material provided to the author by a colleague who has asked for anonymity.7

? Ibid., p.xi.

8 Carol Lancaster, Foreign Aid: Diplomacy, Development, Domestic Politics (Chicago: University of Chicago Press, 23007), p. 4.

9 Des Gasper, “Ethics and the Conduct of International Development Aid: Charity and Obligation,” in Forum for Development Studies (Oslo), vpl. 1, no. 1 (1999), pp.23-57.

10 Lancaster, Foreign Aid, p. 7.

11 Rugumamu, Lethal Aid, pp. 2-3 and p. 32.

12 Vernon W. Ruttan, United States Development Assistance Policy: The Domestic Politics of Foreign Economic Aid (Baltimore: Johns Hopkins University Press, 1996), p. 8.

13 Judith Tendler, Inside Foreign Aid (Baltimore: The Johns Hopkins University Press, 1975), p. 10.

14 Lancaster, Foreign Aid, p. 9. Italics from the original.

15 Ibid., p. 9 and 11.

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to 1948. Second, foreign aid and international charity are linked as an industry, as a component of organized religion and ultimately as a self-serving system. Thirdly Maren goes on, “no country was ever transformed from being famine-prone to food self-sufficiency by international charity.”32 The implications of this legacy were clear; “charity and development work are political [and] doing relief and development work in the context of oppression is counter-productive.”33 The promotion of development if it is to be system changing could well threaten both donor and recipient. Undertaking development work, moreover, can sometimes be a subversive activity.

16 Barbara Ward, The Rich Nations and the Poor Nations (New York: W.W. Norton, 1962), p. 15.

17 Tendler, Inside Foreign Aid, p. 11.

19 Carol Lancaster, Transforming Foreign Aid: United States Assistance in the 21 st Century (Washington, D.C.: Institute for International Economics, 2000), p. 9.

20 George Liska, The New Statecraft: Foreign Aid in American Foreign Policy (Chicago: University of Chicago Press, 1960).

21 Lancaster, Foreign Aid, p. 13-16.

22 Paul Mosley, Overseas Aid: Its Defence and Reform (Brighton, UK: Wheatsheaf Books, 1987), p. 3.

23 Steven W. Hook, National Interest and Foreign Aid (Boulder Col.: Lynne Rienner, 1995), p. 14.

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? Ralph H. Smuckler and Robert J. Berg, “New Challenges New Opportunities, U.S. Cooperation for International Growth and Development in the 1990s,” Michigan State University, August 1988, p.vi.

27 William Vogt, “Point Four Propaganda and Reality” in American Perspective, vol. iv, no. 2 (Spring, 1950), pp. 125. The Entire article is on pp. 122-129.

28 Vogt, “Point Four Propaganda,” p. 65.

29 John D. Montgomery, The Politics of Foreign Aid: American Experience in Southeast Asia (New York: Praeger, 1962), p. 266.

30 Barbara W. Tuchman, The March of Folly: From Troy to Vietnam (New York :Alfred A. Knopf, 1984), p. 375.

31 Ibid., p. 381.

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Generally, the motives of states in foreign aid policy terms are seen as humanitarian, economic and security. Historically, policy makers are informed by their view of national interest.34 Charity as a motivation retains a “role even in a world with aid reconceptualised in ‘development compacts’ or regimes of human rights.”35 Those who see charity and philanthropy as motivations for foreign aid see these motivations as “grounded in puritan type concerns with self-improvement through self disciplining and partial renunciation” of worldly goods.36 To many, it is the precepts of the Protestant ethic which are central to the success of foreign aid.37

There has been one constant defining foreign aid over the last fifty years. At least part of the motivation for foreign aid has (according to its advocates) been ethical and humanitarian in nature. The goal has been to help people who have suffered economically through war, natural disaster or underdevelopment. Policy makers in more developed countries, and especially in the United States, have tended to see their action both in terms of the their generosity and to justify the use of foreign and military aid (including the use of force) in order to meet Cold War ideological and developmental goals. This trend has continued in the post-September 11th period.

The key policy and ethical issue facing many advocates of foreign aid is the extent to which foreign aid can and should be used to promote income distribution. As Paul Mosley, has put it, foreign aid’s “impact on income distribution is essentially subjective….”38 Beyond this, evidence available over the past fifty years suggests that foreign aid can assist the middle class and the working poor but not the poorest of the poor.39 The bottom end of the social system is untouchable by the foreign aid process. At issue is whether support for the middle class is enough to justify foreign economic and social assistance?

A related controversy revolves around the issue of values. To many, idealism is based on a more optimistic view of the world, as developed by Immanuel Kant and later Woodrow Wilson.40 There are, as Steven W. Hook, points out both a “realist paradigm in international relations theory…and cosmopolitan, cooperative, or altruistic strains [based on idealism].”41 In the post World War II period, it was still the eighteenth century views of Kant that have influenced thinking on foreign aid and assumed that the highest level of development required democratic societies with both freedom of dissent and the protection of political rights.42

32 Michael Maren,The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity (New York: Free Press, 1997), p. 21.

33 Ibid., p. 88.

38 Mosley, Overseas Aid, p. 156.

39 Ibid., p. 165 and p. 170.

40 Hook, National Interest and Foreign Aid, p. 183.

41 Ibid., p.5.

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Some critics have pointed to the self-serving nature of foreign aid. Indeed, in 1958, almost 76 percent of all expenditures under the Mutual Security Agency were spent in the U.S.43

There was little evidence, according to the State Department, that assistance programs directly built up economic enterprises or supported U.S. economic activity though it did promote U.S. marketing, expand trade opportunities and protect the interests of the U.S. economy.44 This perception is shared by many in the developing world who see foreign aid as self-serving for the donor or related to value shifts which will benefit the northern tier states. As early as 1963, Edward Banfield warned against the fog of moralizing in terms of foreign aid.45 As Mary Anderson has put it:

[I]t is a moral and logical fallacy to conclude that because aid can do harm, a decision not to give aid would do no harm…. By failing to support people engaged in a battle for justice,we support the status quo of injustice.46

The evidence discussed in this book suggests that the humanitarian and development goals of foreign aid sometimes have been distorted through the use of aid by donor countries for commercial, military and other political purposes.47 Prior to 1989, foreign aid in large part was directed at Cold War influences between and among the great powers. In the post-Cold War period, foreign aid often was used as a carrot to tempt conflicting sides in civil strife into accepting mediation or as a component of the war on terror.48

In the bridge between security and foreign aid policy, there has been a disproportion of the power distribution between Less Developed Countries (LDC) and Western countries and, especially during the post-Cold War period, American power.49 “Aid chains” as David Sogge has noted, “are systems of power. They consist of lines of command from the top. They afford a lot of control but they are not almighty. For funny things can happen to policies as they travel down aid chains.”50 Ultimately foreign aid contracting organizations, like their counterparts in other areas of contracting, are in a struggle to capture and retain resources.51

Foreign aid sponsored reform efforts targeted at preventing a new Communist revolution in Asia, Africa or Latin America. Left wing movements were considered threatening to ruling elites and in a number of recipient countries there was substantial resistance to donor demands and conditions.52 There has also been increasing resentment in recipient countries about the administrative mechanics of American foreign aid which many recipient countries felt were very cumbersome.

42 Ibid., p.11.

49 Ibid., p. 340.

50 David Sogge, Give and Take: What’s the Matter with Foreign Aid? (London: Zed Books, 2002), p. 65.

51 Ibid., p. 67.

52 Montgomery, The Politics of Foreign Aid,p. 75.

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The theory of foreign aid was that it would give friendly leaders the opportunity to maintain their authority and legitimacy by rendering better services to their own citizens.53 The result was supposed to be a greater likelihood of political stability in Third World countries. There were, according to Montgomery, two schools of foreign aid, a hard school and a soft school. The hard school focused on security assistance that was both costly and politically risky. The soft school took what Montgomery calls the classical path of foreign aid:

Improve public health and education, introduce modern agricultural technologies, encourage small-scale industries; and carry out a wide range of agrarian reform from land redistribution through the organization of cooperatives and the provision of rural credit and farm inputs.54

The major powers from the beginning have used aid to achieve short term security and diplomatic objectives.55 A statistical analysis of foreign aid disbursement by the major donors clearly demonstrates that the only significant pattern of distribution was the foreign policy interests of the donors.56 There are those who oppose the use of foreign aid as an instrument of foreign or military policy.57 However, according to Liska, “Foreign aid is meant to influence the international behavior of the recipient.”58 Foreign crises almost always produce either a demand for foreign aid, or for critics of the U.S. policy, a demand for the end of foreign aid activities.59

Humanitarian Approaches and Commerce

Ultimately there have been both policy problems and moral ambiguities that have plagued technical assistance and foreign aid since the end of the Second World War. These are rooted both in the evolution of foreign aid policy over the last half century but also in the ethical, economic and cultural assumptions that were the antecedents of state to state foreign aid as they developed prior to and in the wake of the Second World War. Thus the first section of this book goes back to the period prior to 1948 and the formal beginning of foreign aid during the Truman administration (1945-1953).

There are three inter-related ethical or moral arguments that are to be considered when discussing foreign aid policy.60 These are entitlement, distributive justice and the existence of a global contract. The entitlement argument suggests that foreign aid is compensation to LDCs for past injustices and exploitation and addresses the problem of unequal distribution of natural and financial resources worldwide. A problem in addressing this issue is how to translate an abstract concern into contemporary policies in a world which is divided into nation-states subjected to domestic political pressures.

A second issue, related to the entitlement argument, is that of distributive justice. Since financial investment is distributed unequally around the world social justice arguments suggest that financial resources should flow to areas that are under-invested. This argument flies in the

60 The following section is based on Vernon W. Ruttan’s important book, United States Development Assistance Policy: The Domestic Politics of Foreign Economic Aid (Baltimore: The Johns Hopkins University Press, 1996(, pp. 23-26.

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face of supply and demand principles. Twenty-first century economics rejects such moral obligation and social justice arguments though it must be noted that there is a significant popular sentiment in many countries that supports the social justice perspective.

A third component of the redistribution ethic is the idea of a global contract. The inter-dependence of the twenty-first century world is such that part of the search for global order includes the resolution of conflicts, the development of more equalized inter-dependence and political stability. Foreign aid is part of a broader set of global contracts that define globalization and international relations. From this perspective global stability is in sync with national self-interest.

All three components of a moral order that supports foreign aid are limited either in their application or in their logic. This being the case, they have given policy makers little guidance historically. While ethical considerations have influenced thinking about foreign aid, they compete with or complement national self-interest and political economy arguments. It is to these issues that we now turn.

Financial Inducements and the Origins of Foreign Aid

Those who write about foreign aid usually assume that foreign aid and technical assistance are post World War II developments. Stephen Browne argues that that overseas assistance “grew out of several processes unfolding in the immediate post-war era, and is thus about half a century old.”61 The view here differs from this assumption and assumes a much longer legacy. The use of financial inducements in international relations goes back hundreds of years in diplomatic intercourse.

The book will begin with a brief examination of the origins of foreign aid, as part of a set of complex international exchanges, from the eighteenth, nineteenth and early twentieth centuries in both Europe and the United States. Focus is deliberately historical and begins with a discussion of this eighteenth, nineteenth and early twentieth century legacy and goes on to explore the impact of that legacy on post World War II foreign aid policy

There have been several factors that have impacted upon the foreign aid process over the past two hundred years. Going back to the origins of the nation state, there have always been commercial motives involved in international humanitarian assistance. Technical assistance was seen as a way of gaining a foothold in the markets of Asian, African, Caribbean and Latin American countries. All nations, large and small, have had links between their foreign aid and their trade policies and the private sector has long played an important role in providing both commodities and services to foreign aid recipients.

Humanitarian aid begins with the early influence of charity and compassion. Both were important factors in the evolution of international assistance in the in the eighteenth and nineteenth century.62 Focus was initially on humanitarian and religious assumptions of philanthropic organizations that began to work internationally. Many of these humanitarian assumptions evolved out of the imperialism of the nineteenth and early twentieth century in which the United States had a tangential but significant part.

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Humanitarian and development assistance had its origins in the eighteenth century where many of the assumptions about underdevelopment, culture and international ethics were formed. It was religion, and specifically proselytizing Christianity, that linked humanitarianism with missionary work down to and into the twentieth century. From its modern origins in the mid- nineteenth century until the end of World War II, it was philanthropy and non-governmental organizations that initially defined the international assistance agenda.63

It is no doubt true that the “development objectives of aid programmes have been distorted by the use of aid for donor commercial and political advantage.”64 Donor countries long have been able to require that the resources granted in foreign aid be used to purchase their own services and goods, a procedure known as the tying of foreign aid. In 1989 close to 64 percent of U.S. bilateral aid was at least partly tied.65 That said, economic interests probably do not always constitute a dominant influence in foreign aid policy. Commercial and trade interests have been a part of a broader political and security environment of U.S. foreign aid.

Government sponsored foreign aid after World War I initially addressed problems of a humanitarian nature that were essentially charitable in their assumptions. In the United States, the initial technical assistance and foreign aid focus, prior to World War Two, was on Latin America, as well as several nations in other parts of the world where the U.S. had historical interests. The book spends time on this historical experience since it is seldom discussed in contemporary debates on foreign aid policy.

Part one of this book examines developments prior to the declaration of the Point Four principles by President Harry Truman creating what we now call foreign aid and technical assistance in the United States. The goal is to both understand the assumptions behind humanitarian and commercial concerns and gain an understanding of the processes used to provide government financed international assistance after World War II.

After World War II, foreign aid went through six periods: (1) initial assistance to Greece and Turkey under the Truman Doctrine, (2) the Marshall Plan and Point Four period; (3) the Vietnam War period and its aftermath; (4) the equity versus growth debate, (5) the imposition of structural adjustment programs; and (6) the post-September 11, 2001 period. Each of these six periods will be examined in this book. The book ends with a discussion of foreign aid as it is likely to evolve in the early part of the twenty-first century.

The Search for a Counter-Thesis

The Cold War

The second part of this book examines the origins of foreign aid policy after the Second World War and the Cold War assumptions that defined it. The goal of the U.S. was to contain communism and ultimately to “win” the Cold War. This was a realistic strategy for a real concern. Foreign aid policies until 1989 kept military and political assistance to lesser developed states within the context of Cold War competition and sometimes subordinated economic assistance to the U.S.’s perceived security needs.66

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By the end of the 1950s, foreign aid served as an extension of the ideological division between the East and the West.67 To its critics, “Western donors…[used] conditions attached to their aid as a means of forcing non-aligned developing countries with mixed economies away from socialism and public ownership and towards free market capitalism.”68 Criticism, at its most extreme, explains foreign aid in terms of expanding the international capitalist system. Those of a more realist bent, saw international security as the primary motive for foreign aid during this period.

Particular attention is given here to the legacy of Vietnam as it impacted foreign aid between 1951 and 1975. This was a watershed event not only in military but in foreign assistance terms. Over half of the foreign aid officials in the 1980s and 1990s had served in Vietnam in a situation where military and foreign aid intermingled and where processes of U.S. foreign aid allocation, positive as well as negative, were defined.

During the Cold War period, U.S. foreign aid, though low in terms of per capita assistance, remained large in absolute terms and often set the policy agenda among multilateral and many bilateral organizations outside of the United States. The end of the Cold War in 1989 had an impact on the nature of the international system more generally and foreign aid more specifically. As Madeleine Albright points out:

In colonial times, conflicts in Africa [and elsewhere] were settled through negotiations among the European powers. During the Cold War, outcomes were influenced by military assistance and proxy troops provided by one bloc or another. In the new era, there were no similarly potent external forces seeking to maintain order.69

From the Cold War to the War on Terror

The third section of this book steps back from our historical analysis, and examines the processes that defined U.S. foreign aid in the late twentieth century. It examines the impact of foreign aid on recipient countries and the way in which strategic planning became weakened with the development of a project approach to development assistance. This book also tries to analyze the policies of the U.S. government and on the grants and contracts process that have come to define U.S. international assistance. This “projectization” of foreign aid has meant that the U.S. was ill-equipped to address the challenges of foreign policy in the post-September 11 era.

In this section of the book we examine bilateral aid in the late twentieth century and the contracting process, grants, and the role of NGOs during the period 1989 to 2005. Focus in this book is on linking current and recent processes and values with those identified during the earlier pre-World War II period. The book will also examine the counter-role relationships between donors and LDC program managers.

The changing international environment, after September 11, would have an immense impact upon bilateral and multilateral foreign aid policy at the beginning of the twenty-first

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century. This legacy is particularly poignant in the aftermath of September 11, 2001 and the quagmire of U.S. military and civil involvement in Iraq and Afghanistan.

The book will conclude with a discussion of the moral ambiguities and uncertainties of foreign aid in the wake of the September 11th tragedy and the assumptions that have defined the U.S. response to these attacks. For purposes of discussion, (and using the writers’ license) we will begin our discussion of twenty-first century foreign policy with the end of the Cold War in 1989).

Foreign aid debates increased after September 11 with positions both for and against unilateral vs. multilateral approaches to foreign and security policy debated. Of particular concern is the shift in emphasis from economic development policy to conflict resolution, security concerns and regime reconstruction and governance within the context of the U.S. perceived War on Terror. The book hones in on the limitations of unilateralism within the context of what Barbara Tuchman has called the March of Folly.70

Foreign Aid Assumptions and the March of Folly

In foreign policy, (including foreign aid policy) national honor has often required that foolish policies continue to be pursued despite overwhelming evidence that the goal was unattainable. This is what Barbara Tuchman has called the “The March of Folly.”71 This has certainly historically been true of some U.S. policies. Too often, foreign aid policies are pursued almost perversely even when “demonstrably unworkable or counter-productive.”72 As Barbara Tuchman has pointed out, “[a] phenomenon noticeable throughout history regardless of place or period is the pursuit by governments of policies contrary to their own interests.”73 Such policies are contrary both to important constituencies or the state as a whole.

Moral issues, as they apply to foreign aid, become difficult when we turn from goals to policy. The dominance of patterns of interventionism and unilateralism beginning in the 1960s suggests that, after 1960, the United States emerged as “the last of the ideological [developed] nations.”74 According to Stillman and Pfaff, writing as early as 1966, “the United States [had] a tradition of political messianism, and of a conception of itself as different, and better, than other nations – as a ‘redeemed’ political society with a mission of redemption to others.”75 Such a unilateral interventionist policy, according to its critics, has in the past resulted in immoral and unethical actions. Unilateralism in the post-September 11 world seems to have perpetuated this problem.

Foreign aid policies have often been counter-productive since productive policies require thoughtful analysis and historically there is evidence of more viable alternatives in many policy choices made by U.S. leaders. Unfortunately serious thought is often not the habit of governments.76 Unworkable policies, Tuchman points out, are often pursued at the sacrifice of policies which are possible.77 Foreign aid policy should not be part of a “quasi-theological mission but merely a means to certain human ends.”78 Counter-productive policies can be identified if there is a real time alternative course of action available that can be subject to discussion and eventual choice.

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Folly in public policy occurs when groups and organizations are unable to make decisions and make draw conclusions from the available evidence.79 The U.S. foreign and military assistance involvement in Vietnam and much of the foreign aid policies which followed this were part of this pattern. U.S. foreign and military assistance involvement in Vietnam, as Robert McNamara so forcefully (if belatedly) has demonstrated, and many of the foreign aid policies which followed the Vietnam era, have followed this pattern.80

Conclusion

There are three problems with decision-making about foreign aid that lead to counter-productive policies, failure and folly. First, decisions are often formed through prejudice which is dangerous to government decision-making. Secondly, decisions in turn are too often made with the terrible encumbrances of honor and dignity. Third, foreign aid sometimes stimulates a cargo cult like response in recipient countries, a naïve image and set of assumptions of assistance that could never be replicated in reality.81

Correctives are important and self-correction is a part of the process of policy debate. What Emory Roe calls the development of the counter-narrative is

to think counter-intuitively [and] to conceive of a rival hypothesis or set of hypotheses that could plausibly reverse what appears to be the case, where the reversal in question, even[though] it proves factually not to be the case, nonetheless provides a possible policy option for future attention because of its very plausibility.82

This book has been influenced by what Robert Cowley calls “counterfactual” history, that is history that might have been but which can “cast a reflective light on what did [occur].” 83 The book is designed both as a commentary and perhaps a corrective from one who has been involved in foreign aid both as a practitioner and an academic for over forty years. This book aspires in the sense of Cowley and Roe to be a corrective in our understanding of the foreign aid policy process.

The book is at least in part a polemic, in the best sense of that word, and while it attempts to tell the truth, as I know it, it is not intended to be a work of social science.84 It addresses both academic debate and public perceptions as reflected in the normative discussions about foreign aid. Rather than leaving international assistance to the social scientist, it takes journalistic, activist and normative discussions seriously. It is targeted at the general reader and the student of foreign policy rather than the social scientist or the economist. It treats all sources as proximate and, while social science research is important, assumes that foreign policy and national security are too important to be left in the abstract empirical discussions of the academy’s ivory tower.

The approach here concurs with Steven Hook in arguing that “foreign assistance may productively be viewed as a microcosm of nation-states’ broader efforts in foreign affairs.”85

The foreign aid story “is full of entertaining and penetrating commentaries about the ironies as well as the historic failure, of foreign aid.”86 There is also a great deal of sadness and lost

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opportunity in the story. While ultimately this book will discuss more failures than successes it will note the latter when they occur as lessons for a future of international assistance that has yet to be defined.

34 Hook, National Interest and Foreign Aid, p. xii,

35 Gasper, “Ethics and the Conduct of International Development Aid, p.54.

36 Ibid., pp.38.

37 See Max Weber, The Protestant ethic and the spirit of capitalism Translated by Talcott Parsons (New York, Scribner, 1958).

43 In terms of expenditure. For a discussion of these trends see Vernon W. Ruttan, United States Development Assistance Policy: The Domestic Politics of Foreign Economic Aid (Baltimore: The Johns Hopkins University Press, 1996), esp. pp. 72-75.

44 The United States Economy and The Mutual Security Program (Washington D.C.: U.S. Department of State, April, 1959), p. 6 and 16.

45 Ibid., p. 35.

46 Mary B, Anderson, Do No Harm: How Aid Can Support Peace-or War (Boulder, CO.: Lynne Rienner, 1999), p. 2 and 7.

47 Peter Hjertholm and Howard White, “Foreign Aid in Historical Perspective, Background and Trends,” Foreign Aid and Development: Directions for the Future, Peter Hjertholm, ed. (London: Routledge, 2002), pp. 80-102.

48 Frances FitzGerald, Fire in the Lake: The Vietnamese and the Americans in Vietnam (New York: Vintage, 1972), p. 291.

53 John D. Montgomery, Aftermath: Tarnished Outcomes of American Foreign Policy (Dover, MA: Auburn House Publishing Company, 1986), p. 65.

54 Montgomery, Aftermath, p. 68.

55 Severine M. Rugumamu, Lethal Aid: The Illusion of Socialism and Self-Reliance in Tanzania (Trenton, N.J.: Africa World Press, 1997), p. 120.

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Endnotes

56 Ibid.,, p. 61. U.S., British, French and German aid was analyzed.

57 George Liska, The New Statecraft: Foreign Aid in American Foreign Policy (Chicago: University of Chicago Press, 1960), p. 87.

58 Ibid., p. 127.

59 Ibid., p. 26.

61 Stephen Browne, Beyond Aid: From Patronage to Partnership (Aldershot, UK: Ashgate Publishing, 1999).

62 Mosley, Overseas Aid, p. p. 3

63 Edmund Stillman and William Pfaff, Power and Impotence: The Failure of America’s Foreign Policy, (New York: Random House, 1966), p. 218.

64 Hjertholm and White, Survey of Foreign Aid, p. 3.

65 Hook, National Interest and Foreign Aid , p. 33.

66 Mosley, Overseas Aid, p. 5

67 Hook, National Interest and Foreign Aid, p. 22.

68 Mosley, Overseas Aid., p. 38

69 Madeleine Albright, Madame Secretary: A Memoir (New York: Miramax Books, 2003), p. 450-451.

70 See Tuchman’s important book, The March of Folly.

71 Tuchman, The March of Folly.72

? Stillman and Pfaff, Power and Impotence, p. 33.

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73 Tuchman, The March of Folly, p. 5.

74 Stillman and Pfaff, Power and Impotence, p. 179.

75 Ibid., p. 225.

76 Tuchman, The March of Folly, p. 196.

77 Ibid., pp. 128.

78 Stillman, and Pfaff, Power and Impotence, p. 185.

79 Tuchman, The March of Folly, , p. 234.

80 Robert S. McNamara, In Retrospect: The Tragedy and Lessons of Vietnam (New York: Random House Times Books, 1995). 81 Ibid., pp. 4-33 and Stillman and Pfaff, Power and Impotence, p. 48.

82 Emery Roe, Except- Africa: Remaking Development, Rethinking Power (New Brunswick, NJ: Transaction Publishers, 1998), p. 9.

83 Robert Cowley, “Introduction,” What if? America: Eminent Historians Imagine What Might Have Been, Robert Cowley, ed. (London: Pan Books, 2003), p.xiii.

84 See Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order (New York: Simon & Schuster, 1996), p. 13. One does not have to agree with Huntington to admire the skill and clarity with which he has presented his polemic.

85 Hook, National Interest and Foreign Aid, p. 34.

86 Robert D. Kaplan, “Far and Away,” Book Review of Dark Star Safari by Paul Theroux, Book World, Mar.30, 2003, p.8.

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