Commentary

The United States Is Not Stingy

Criticism levied against the United States because of its initial response to the devastation caused by the tsunami in the Indian Ocean is utterly inappropriate. It is clear now that in addition to the tenfold increase in financial help promised by the U.S. government, the unfortunate victims of the tsunami will also benefit from hundreds of millions of dollars of private philanthropy and in-kind help provided by the American people.

However, American generosity in the provision of emergency aid should not be confused with the U.S. contributions of development aid. Development aid has a sorry record in helping economic development in poor countries and should be stopped.

According to the U.S. Secretary of State Colin Powell, the American government made its initial financial commitment of $35 million in response to the early estimates of the devastation in the region. As the numbers of casualties increased, so did American financial help. Reports suggest that the current American commitment of $350 million may well rise even further.

It is true that other governments promised more money. Australia, for example, promised $764 million, Germany $661 million, and Japan $500 million. The British government pledged to increase its aid to “several hundred millions of pounds.” But such calculations ignore the crucial role that private philanthropy has historically played in the United States. The American Red Cross, for example, has already received $103 million in private donations. According to the Associated Press, on January 4, the overall level of private donations from the United States reached $200 million.

Nor does the official financial assistance pledged by the American government include the so-called “in-kind” help, which is crucial if the relief effort is to succeed. Without American assistance in distribution of aid, much of the food and medicines donated by other developed nations would take far too long to reach the victims of the tsunami. Part of the task of distributing aid now rests with the USS Abraham Lincoln carrier strike group, the operational cost of which is over $6 million per day. If the USS Abraham Lincoln remains on site for just one month, it will add $180 million in in-kind help.

In addition to the carrier strike group, the United States has also dispatched a number of other ships and supporting craft to the region. Those include the amphibious assault ship USS Bonhomme Richard and 12 other ships from the U.S. Navy’s Military Sealift Command - all laden with food, fuel, medical supplies, construction and road-building equipment and electrical power-generating equipment. The USNS Mercy, a 1000-bed hospital ship that was sent to the region, will help to arrest the spread of water-born disease.

The people in the region recognize the positive role played by the American military. The spokesman for the Indonesian government, for example, told the British newspaper the Guardian that the U.S. naval presence “made a big difference.” Indonesia, he continued, does “not have enough helicopters and so the American aircraft are enabling us to reach many more people… than would otherwise have been the case. They [Americans] are certainly saving lives.”

In view of the overwhelming generosity of the American people and their government, it is perhaps not surprising that the United Nations official who accused the United States of being “stingy” changed his position. Jan Egeland, the U.N. Undersecretary-General for Humanitarian Affairs, now claims that the United States, rather than being stingy in terms of helping the tsunami victims, is ungenerous in providing foreign aid to promote development.

But emergency and development aid are hardly the same. Emergency aid, especially, when poor countries are concerned, saves lives. The ostensible function of development aid is to help poor countries’ economies to grow. Here the United States has, once again, taken the lead. According Doug Bandow, senior fellow at the Cato Institute, between 1945 and 1997 the United States provided $1 trillion in foreign aid to countries around the world.

The trouble is that unlike emergency aid, development aid is by no means benign in its effects. Africa, for example, has been one of the largest recipients of per capita foreign aid. But according to the National Bureau of Economic Research, Africa has experienced decades of economic decline. African per capita GDP is now 11 percent lower than what it was in 1974. The continent today accounts for a greater percentage of the world’s poor than ever before. In 1970, only one in 10 poor people lived in Africa. Today that number is one in two. Regions that received less foreign aid per capita fared better.

These days, even international aid agencies, such as the World Bank, recognize the negative effect of much past foreign aid on development in poor countries. Money lent or granted to corrupt regimes in the developing world is often stolen, misallocated, or used to suppress the freedoms of the populace. Development aid often serves as a disincentive to governments in the developing world to reform their economies. The U.N. unfortunately continues with the old mantra, advocating that more good money be thrown after bad.

The recent events in the Indian Ocean brought out the best in the people of the United States as well as others across the globe. Care must be taken to prevent the foreign aid lobby from using this tragedy to suit its own interests.

Marian L. Tupy is assistant director of the Project on Global Economic Liberty at the Cato Institute.