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U.S. Foreign Aid as Foreign Policy

Debates, Choices and Normative Ambiguities

Louis A. Picard

Division of International Development

Graduate School of Public and International Affairs

University of Pittsburgh

February 28, 2007

This is a manuscript in progress and as such may contain errors or lack clarity.

For this I apologize to the reader.

|Part I: The Historical Legacy |

| | |

|Chapter One: The Nature of the Book |2 |

|Foreign Aid as Foreign Policy |2-3 |

|The Nature of Foreign Aid |3-5 |

|The Importance of Institutional Development |5-8 |

|Humanitarian Approaches and Commerce |8 |

|Financial Inducements and the Origins of Foreign Aid |8-10 |

|The Search for a Counter-Thesis |10 |

|The Cold War |10-11 |

|From the Cold War to the War on Terror |11 |

|Foreign Aid Assumptions and the March of Folly |11-12 |

|Conclusion |12-13 |

| | |

|Chapter Two: Historical Antecedents to Foreign Aid |19 |

|Historical Theories of Foreign Policy |19 |

|Foreign Exchange as a Form of Diplomacy |19-21 |

|Imperial Expansion in the Nineteenth Century |22-23 |

|The Impact of Colonialism on International Assistance |23 |

|The Missionary Factor |23-25 |

|The Legacy of Colonialism |25-28 |

|Imperial Influences on Development |28-29 |

|Conclusion |29-30 |

| | |

|Chapter Three: Manifest Destiny and American Antecedents |36 |

|The American Expansion: 1789-1900 |36 |

|Manifest Destiny |36-38 |

|The Impact of the Spanish-American War |38-41 |

|International Assistance: Historical Antecedents |41-43 |

|Early Technical Assistance |43-45 |

|Interventions in the Western Hemisphere |45 |

|Hemispheric Technical Assistance |45-46 |

|Cuba: The Model Protectorate |46-47 |

|The Haiti Conundrum and Latin America: Variations on a Theme |48-50 |

|Competition with Europe and Imperial Forms |50 |

|The Prelude to U.S. Interventions |50-52 |

|Liberia: America’s African Colony |52-53 |

|The Modernization of Turkey |53-54 |

|Opening Up of East Asia |54-57 |

|Conclusion |57 |

| | |

|Chapter Four: The World Wars and the Origins of Contemporary U.S. Foreign Aid |64 |

|War and the Origins of Foreign Aid |64 |

|Humanitarian Assistance |65-67 |

|Early Foreign Aid |67 |

|Influence, Values and Stereotypes in Inter-war International Assistance |67-70 |

|Foreign Assistance and the New Deal |70 |

|The Good Neighbor Policy and the Beginning of Modern Foreign Aid |70-73 |

|The Impact of Renewed War |73-76 |

|Crisis in the Balkans and the Marshall Plan |76-78 |

|A Model of Foreign Aid |78-80 |

|Conclusion |80 |

| | |

|Part II: U.S. Foreign Aid in the Last Half of the Twentieth Century |

| | |

|Chapter Five: Point Four, the Cold War, and the Legacy of Vietnam |89 |

|Origins in the Cold War |89 |

|Foreign Assistance before 1950 |89-91 |

|The 1950 Point Four Program |91-96 |

|The First Decade |96-97 |

|Staffing Foreign Aid |97-99 |

|The Eisenhower Legacy and Criticism of Foreign Aid |99-101 |

|Institutionalizing Foreign Aid |101 |

|The Situation in 1960 |101-103 |

|The Kennedy Reforms |103-105 |

|The Creation of USAID |105-106 |

|Vietnam |106 |

|Early Years and Assumptions |106-109 |

|Kennedy, Johnson and Vietnam |109-112 |

|The Militarization of Aid |112-115 |

|The Legacy |115-117 |

|Conclusion |117 |

| | |

|Chapter Six: Basic Needs, Structural Adjustment and the End of the Cold War |131 |

|The Search for New Models |131 |

|Agriculture, Food Aid and Rural Development |131-133 |

|The Shift to Basic Needs |133-135 |

|The Poverty Debate |135-137 |

|Policy Reforms and Structural Adjustment |137 |

|Ronald Reagan and a New Foreign Policy Agenda |137-138 |

|The Problem of Debt, Structural Adjustment and Privatization |138-143 |

|Towards the End of the Century |143 |

|George Herbert Walker Bush and William Jefferson Clinton: The End of the Cold War |143-148 |

|Conclusion |148-149 |

| | |

|Part III: Towards the Millennium: Processes, Policies and Projects |

| | |

|Chapter Seven: Foreign Aid at the End of the Twentieth Century: From Policy to Process |159 |

|Institutional Development |159 |

|Technical Assistance and Organizational Development |159-161 |

|Planning and the Curse of the Project |161-164 |

|The Projectization of Foreign Aid |164-165 |

|The Changing Environment of Foreign Aid |165 |

|Contracts, Grants and the NGO Conundrum |165-170 |

|Personnel Ceilings and Contracting Out |171-174 |

|Intra-Governmental Agreements and Public-Private Partnerships? |174-176 |

|Capacity Building for Sustainability |177 |

|Human Resources and Institutional Development |177-179 |

|Representation, Education and Training Realities |179-184 |

|Conclusion |184-185 |

| | |

|Chapter Eight: Donors and Clients: Dilemmas and Contradictions |197 |

|Operational Limitations |197 |

|Stereotypes, Motives and Dilemmas |197-199 |

|The Not So New Missionaries |199-203 |

|Donor Fatigue and Organizational Weakness |203-206 |

|Debates about Funding |206 |

|Standing Operating Procedures |206-209 |

|Foreign Aid Spending and the End of the Cold War |209-212 |

|Dealing with Donors |212 |

|The Donor as a Problem |212-213 |

|The LDC Program Manager |214-216 |

|Strategies for Coping |216-219 |

|Coping with Clients |219 |

|LDC Failures |219-220 |

|Tolerating Corruption |220-222 |

|Interactions between Donors and Program Officers |222-223 |

|Conclusion |223-225 |

| | |

|Chapter Nine: Foreign Aid: September Eleven and Debates into the Twenty-First Century |241 |

|George W. Bush and Unilateralism |241 |

|The Bush Premises and September 11 |241-243 |

|Iraq: Return to the Quagmire |243-246 |

|Iraq and Foreign Aid |246-248 |

|The Iraq Fiasco |248-250 |

|Contemporary Debates |250 |

|Unilateralism vs. Multilateralism |250-253 |

|Pulling Back from Unilateralism |253-255 |

|Human Security, Democracy and the Governance Problem |255-260 |

|Trade and Investment Debates |260-263 |

|Millennium Challenge Account |263-267 |

|Transformation Diplomacy, USAID and the Department of State |267-270 |

|Conclusion |270-271 |

|Chapter Ten: U.S. Foreign Aid: Challenges for the Future |288 |

|Into the Twenty First Century |288 |

|Limited Successes in Foreign Aid |289-291 |

|When Foreign Aid Fails? |291-295 |

|A Potential for Success? |295-299 |

|Conclusion |299-300 |

Author’s Note

The focus of this book is on U.S. foreign aid policy and its relationship to foreign policy issues. The book has a historical focus, placing foreign aid within the context of diplomacy and foreign policy going back to the eighteenth century and beyond but going up to the present time with the last two chapters examining foreign aid and foreign policy in the post-September 11 world.

The book tries to demonstrate and simplify the complex world of foreign aid with all its diversity and range of definitions. In the end, however, my position is that foreign aid like defense and security policy is a sub-set of foreign policy.. My goal was to write a book that was accessible to an undergraduate university audience but which also presents new ideas, debates and information which will be of interest to foreign policy specialists.

The book does have a point of view which I try to make clear: foreign aid (grants, sub-market loans and non-monetary transfers of resources) can be used to provide social services, develop human resources and democratic institutions. It is not by itself the best tool to promote economic growth. My use of sources is broad and includes non-social science materials both to make the manuscript interesting to the reader and also because I think it provides a broader perspective. It does not shy away from the polemic but tries to use it to understand the diversity in our understanding of foreign aid at a time when foreign policy choices have gotten out of control. I do however make use of the social science sources referred to by one of your reviewers.

While this book is not a memoir it has been effected by more than forty years of work and research in foreign aid and international development work. I have always seen my consulting and practical work, and my academic research, as two halves of the same coin, my consulting work feeding into my research and my academic research informing my consultancies. I try in all of my work to bridge the gap between the academic and the practitioner and the university community and international technical assistance.

Since 1965, I have spent over ten years in long term residency in Uganda, Tanzania, Botswana and South Africa. Over the years, I have worked for USAID, DANIDA, the World Bank, the United Nations Development Programme and the Food and Agriculture Organization and more than a dozen contractors and non-profit organizations on more than fifty short term projects in over 30 countries in Africa, the Middle East, Central America and the Caribbean. This has influenced my judgments presented in this book.

Among others I would like to acknowledge the influence and support that I have received from Ed Connerley, Jeanne North, Ken Kornher and Bob Groelsema currently or formerly with the U.S. Agency for International Development. I am grateful to the support given to me by Al Zuck formerly the Director of the National Association of Schools of Public Affairs and Administration during my period at NASPAA between 1984 and 1987. Financial support for this book came from the Graduate School of Public and International Affairs of the University of Pittsburgh. I am grateful for the Sabbatical granted to me by the University of Pittsburgh from January through August of 2007.

I am grateful to Lynne Rienner, her able staff and the two anonymous readers who commented on an earlier version of this manuscript.

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