DEVELOPMENT-U.S.: Aid Promises Misleading – Report

May 22 2003

By Emad Mekay

WASHINGTON, May 21 (IPS) The Bush administration’s loudly
trumpeted recent announcements of development aid hikes
coupled with more money to fight HIV/AIDS globally do not
match budgetary realities and may translate into far smaller
increases than anticipated, say two economic think tanks.

In a report released on Tuesday, the Center for Global
Development (CGD) and the Center on Budget and Policy
Priorities, both based in Washington, say the promised aid
increases will be far more modest than announced and that
U.S. aid remains well below historical standards and far
below other donor countries.

”The administration was quick to make large announcements
and has been much slower in following through and ensuring
that those announcements translate into actual new spending
on the ground,” said Brian Deese, programme associate
at the CGD.

”I think this is more of a reality check … given adequate
pressure and considerable bi-partisan support in Congress,
we could still see positive development,” he added.

The report comes only days before Congress is to send back
legislation to President George W. Bush responding to his
State of the Union speech request for 15 billion dollars over
five years to fight the HIV/AIDS crisis in Africa and the

That request came on top of Bush’s announcement in March 2002
of the largest increase in development aid since the Kennedy
administration (1961-63), through a proposed hike of 10 billion
dollars for the Millennium Challenge Account (MCA).

The promised increases were hailed as steps to fundamentally
transform U.S. development policy and maximize its impact in
the developing world, and received positive reviews from aid
agencies, development groups and some civil society organisations.

Yet, the new report reveals that although the administration’s
original proposal for the MCA called for a whopping 10 billion
dollars over three years, to reach and sustain annual funding of
five billion dollars a year starting in 2006, Bush’s actual
request for the MCA in the 2004-2006 budget is only four billion

”The administration’s budget proposes funding the Millennium
Challenge Account at levels far less than it has announced,”
says the report, whose authors say they used data from Office
of Management and Budget, the Congressional Budget Office, and
the U.S. Agency for International Development (USAID).

”This is only 40 percent of the administration’s initial
public commitment,” it adds. On top of that, some of the four
billion dollars would be spent after 2006.

To further undermine the administration’s MCA forecast, the
report quotes figures from the Congressional Budget Office (CBO),
a usually optimistic body, that estimates that actual MCA
spending from 2004 through 2006 will be 1..7 billion dollars,
or 17 percent of the president’s initial public commitment.

When the budget was released in early February, some
administration officials suggested that the request was an error,
and that the figures for 2005 and 2006 would be corrected to
reflect the increase to five billion dollars a year.

But the 11-page report notes that till now, ”the numbers have
not been corrected”.

”If the administration does clarify this issue, it will need
to reduce resources proposed for other areas in the budget or
build in a higher expected deficit,” the report adds.

The disparity between rhetoric and reality also extends to
promised funds to battle AIDS. In his State of the Union speech
Bush pledged 10 billion dollars in new spending over the next
five years, but the report says the president originally
requested only 450 million dollars for his new HIV/AIDS
initiative for 2004.

The request, says the report, left unclear how that figure would
be raised over the coming five years to reach the much-touted
10 billion dollars.

Again here, the CBO dampens the forecast, estimating that only
45 million dollars (of the originally proposed 450 million dollars)
is likely to be spent on AIDS in 2004.

With the fine print in place, U.S. aid spending totals a
mere 0.12 percent of the economy, or about 12 cents of every
100 dollars, well below the amount devoted to aid from the end
of World War II through 1996.

Measuring aid as a share of the economy is the standard approach
used in international comparisons.

The report says that after adjusting for inflation, the president’s
budget, plus a recent wartime supplemental request of 2.5 billion
dollars to help reconstruct Iraq, would together result in an
increase in development aid spending from 2003 to 2004 of five
percent in real terms, continuing a string of recent increases.

”But because this spending has been so low in recent years, and
fell so much in the 1990s, the proposed level would still be
meagre by historical standards, particularly when viewed as a
share of the economy and as a share of all government
spending,” it adds.

Still, the proposed increases merely reflect expected economic
growth, it points out.

Under the budget, development aid spending as a share of the
economy would equal an estimated 0.123 percent in 2008, virtually
the same as the 0.124 percent level forecast in 2004.

That means that for the next several years, aid as a share of
the economy is likely to be lower than it ever was in the 50 years
of 1946-1996, and well below one-half the level of Overseas
Development Assistance (ODA) now provided by the typical donor
country, estimated at around 0.30 percent.

”The United States would still be at the bottom of the barrel
among all donors in its spending on development aid (excluding
military aid) as a share of the economy,” concludes the report.

According to the Organisation for Economic Cooperation and
Development (OECD), in 2002 Washington contributed 0.12 percent
of its economy to ODA. This was the lowest share of the 22 nations
examined, with the second lowest country, Italy, contributing
0.20 percent of its economy.

But Deese, one of the report’s authors, warned against
interpreting the paper as a call to simply increase foreign aid.
He said the Bush administration should continue to pressure
developing countries to make aid more effective.

”It’s not necessarily that the U.S. should immediately increase
its foreign aid budget to some set level but in fact it should
continue to put some real meat behind a commitment (by developing
nations) to do more and do it well.”
+Center for Global Development


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