December 30, 2004

December 30, 2004 | WebMemo on Trade, Economic Freedom

American Generosity is Underappreciated

The tragic loss of life from the earthquake and tsunami in the Indian Ocean now exceeds 100,000 and may eventually double that, due to disease, civil unrest, and other factors. In response, the United States and other nations have pledged millions of dollars in humanitarian assistance to aid the survivors and assist affected nations in recovering from the disaster. Unfortunately, some in the international aid business cannot seem to shake their reflexive criticism of America despite ample evidence of its generosity.

 

The U.S. government initially announced that it would provide $15 million in humanitarian aid and send experts to help affected nations recover. Jan Egeland, U.N. Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, criticized the U.S. commitment as "stingy" despite the fact that the U.S. pledge far exceeded those of all European nations. He quickly apologized and said that he did not mean to single out the United States, but the transcript of his comments clearly identifies the U.S. as the primary target.

 

Rhetoric vs. Reality

Mr. Egelund's criticism was based on his belief that America is not providing enough development assistance-specifically, aid as a percentage of its gross national income (GNI). According to the Organization for Economic Cooperation and Development (OECD), the U.S. is dead last in aid as a percent of GNI at 0.15 percent.[1] Mr. Egelund's native country of Norway has a ratio of 0.92 percent. There are several problems with this approach:

  • Actual dollar contributions reveal that the U.S. is the world's largest donor. The OECD calculates U.S. development assistance (based on bilateral assistance, humanitarian assistance, and contributions to multilateral institutions like the International Development Association of the World Bank) in 2003 at $16.2 billion-more than double the amount given by France, Germany, or any other European nation.[2] Japan is second at $8.9 billion.
     
  • Private aid is ignored. These numbers do not include private assistance. This is not a major factor for most other nations because private charity is not large in most countries. It is a gigantic oversight when calculating America's aid ratio, however, because the U.S. Agency for International Development estimated that private assistance was $33.6 billion in 2000.[3] Therefore, the calculations upon which Egelund based his criticism severely shortchange the generosity of the United States.
     
  • It demonstrates an inappropriate focus on inputs rather than outputs. Development assistance should help recipients develop, but the evidence demonstrates that many recipient nations are actually becoming poorer. This is particularly true for sub-Saharan Africa, which is the region of the world most desperately in need of development. Despite hundreds of billions in development assistance, sub-Saharan Africa has performed dismally. Of the 45 sub-Saharan African countries for which per capita GDP data are available from 1980 to 2002, most experienced zero or negative compound annual growth in real per capita GDP (constant 1995 U.S. dollars).[4] Sub-Saharan Africa as a region saw a decline in per capita GDP from $660 in 1980 to $577 in 2002 (in constant terms).[5] Instead of focusing on the amount of assistance, donors should focus on maximizing results through economic freedom, bolstering the rule of law, and adopting strong institutions. Foreign aid cannot replace domestic will to adopt good policies, without which long-term development is impossible.
     
  • America's central role in humanitarian efforts is ignored. Egeland's criticism becomes patently ridiculous after an examination of U.S. assistance for disaster and humanitarian relief-the type of aid needed in the Indian Ocean. Data from the OECD reveal that the U.S. gave nearly $2.5 billion in emergency and distress relief in 2003.[6] All other countries combined gave $3.4 billion, including $475 million from France and $350 million from Norway. Moreover, the U.S. contributed nearly 70 percent of all food assistance.
     
  • America is a key donor to U.N. relief organizations. The United States is a major donor to international relief organizations, including the U.N. Office for the Coordination of Humanitarian Affairs, which Egelund oversees, to which the U.S. is second largest donor (nearly 14 percent in 2003).[7] America is the largest contributor to the U.N. budget at 22 percent, or $317 million, in 2004. It gives over 56 percent of the World Food Program budget and $72 million and $94 million to the Food and Agriculture Organization and the World Health Organization, respectively.[8]

Conclusion     

The United States is the world's largest source of humanitarian aid. By nature, humanitarian aid must be tailored to individual crises: Every single famine, earthquake, flood, or other disaster is unique and requires different types of aid and different strategies. As death tolls climbed in the wake of the disaster in Southeast Asia and the needs of the survivors became clearer, the United States upped its humanitarian aid commitments to the region to $35 million, and expectations are that total U.S. contributions will continue to increase.

 

Criticisms of America's generosity, such as those made by Egeland, fly in the face of reality. International aid experts do their organizations no credit to criticize American largess-especially since following through on their good intentions would be impossible without it.

 

Brett D. Schaefer is the Jay Kingham Fellow in International Regulatory Affairs in the Center for International Trade and Economics at The Heritage Foundation.



 

[1] Data from the most recent year available. Statistical Annex of the 2004 Development Co-operation Report, Table 1, Organization for Economic Co-operation and Development, at http://www.oecd.org/dataoecd/52/9/1893143.xls.

[2] Ibid.

[3] Foreign Aid and the National Interest: Promoting Freedom, Security, and Opportunity, "Overview," U.S. Agency for International Development, p. 27.

[4] Brett D. Schaefer, "Multilateral Economic Development Efforts in Sub-Saharan Africa," Heritage Lecture #858, December 20, 2004, at http://www.heritage.org/Research/TradeandForeignAid/hl858.cfm.

[5]World Bank, World Bank Development Indicators.

[6] Data from the most recent year available. Statistical Annex of the 2004 Development Co-operation Report, Table 13, Organisation for Economic Co-operation and Development, at http://www.oecd.org/dataoecd/52/9/1893143.xls.

[7] OCHA Annual Report 2003, pp. 18-19, at http://ochaonline.un.org/DocView.asp?DocID=759.

[8] "International Organizations and Conferences," Budget of the United States Government, Fiscal Year 2005-Appendix, The Office of Management and Budget, p. 749,

/static/reportimages/5EDC8E0FDB4FCD9F22D1F24C189294EA.pdf and "Funding WFP," United Nations World Food Programme, at http://www.wfp.org/index.asp?section=3;

About the Author

Brett D. Schaefer Jay Kingham Senior Research Fellow in International Regulatory Affairs
The Margaret Thatcher Center for Freedom

Related Issues: Trade, Economic Freedom