Justification for the Foreign Aid
Types of Foreign Aid
Foreign Aid Programs
Introduction The American foreign aid is one of the instruments used to extend American dominance in the world. In other words, it is a tool of foreign policy because it gives the US an advantage in the world politics. Reviews are made on the foreign aid yearly whereby the legislature and the executive agree on modalities of the instrument.
Changes are made regarding the composition, objectives and the size of the aid. Recently, the US has been forced to change its strategy following the 9/11 attack. Foreign aid is specifically used to safeguard the American interests related to security. Before the world wars, the US foreign policy was no-interventionist in nature. The policy changed after the Second World War mainly due to President Truman’s policy of containment.
Communism was to be countered in all parts of the world using available mechanisms, including foreign aid. This paper analyzes the various types of foreign aid and how they were used during the Second World War, during the cold war and after the world wars. The effectiveness of the foreign aid is also discussed.
Justification for the Foreign Aid Various American governments have always come up with foreign policies aiming at enhancing the American national security. The first American foreign aid came in after the Second World, popularly referred to as the Marshall Plan (1948-1951). In the 1980s, the foreign aid policies aimed at taming the spread of communism.
The states that were gaining independence at the time were prevented from adopting communist ideas since they could hurt the American dream of dominating the world. In this case, USSR was to be prevented from taking control of the Latin America, Southeast Asia and Africa.
Foreign aid was mostly given out in form of economic benefits and military assistance. After the Cold War, foreign aid policies took a new shape since states were held responsible, especially on matters related to governance. Foreign aid was no longer used to appease states to reject communism since USSR was no more. For instance, the US foreign aid focused on Middle East conflict system.
The US utilized its military and economic power to bring sanity and tranquility in the Middle East societies. In Europe, the aid was used to restore democracy in the newly independent East European states. The aid was also used to end drug trafficking in various parts of the Latin America. Consequently, the fall of the USSR reduced the American funding in the third world.
Get your 100% original paper on any topic done in as little as 3 hours Learn More After the 9/11 attack, foreign aid gained momentum where states around the Middle East such as Pakistan and India received military aid. American foreign policy makers noted that global development was vital in case national interests are to be realized (Calvocoressi 78).
Foreign aid has been an issue that has raised a heated debate because realists view it as a tool used by the state to enhance its foreign domination. In this sense, the government uses the foreign aid to improvement relations between Americans and other nationals in foreign states.
This would give Americans an advantage since they would be in a position to produce and distribute goods easily in other states. Liberalists would argue that foreign aid is specifically used to help those in need. This is because the US is charged with a moral responsibility to help those in need.
Objectives Foreign policy formulators have justified foreign aid as a technique since it promotes the financial development and reduces poverty among the American citizens. The main objective of foreign aid as claimed by realists is to fulfill the American interest. Even though liberalists argue that foreign aid improves foreign states’ governance, the main aim is to command conformity, which is very important in trade.
Other objectives of foreign aid include dealing with population increase, increasing access to fundamental education and health care, defending the atmosphere, supporting constancy in conflictive areas, caring about human rights, limiting weaponry propagation, intensification of alliances, and tackling drug manufacture and trafficking.
In case the above objectives are met, the US would achieve its national interests in the simplest way. Global security would allow American investors to participate in trade easily. It is upon the realization that poverty and few chances are the major causes of insecurity in the world. The US should therefore fund various programs in foreign states to limit the chances of political insecurity.
It is noted different foreign aid programs support different American aims and goals. However, foreign aid programs can be combined to fulfill the broader objective of the state. Multilateral and bilateral aid may combine to come up with a powerful policy that would best meet the demands of Americans. Military and economic aids exist to implement American wishes in the Middle East and South Asia. Foreign aid policies in the Latin America aim at countering drug trafficking.
We will write a custom Essay on American Foreign Aid specifically for you! Get your first paper with 15% OFF Learn More Types of Foreign Aid The US government uses two major types of foreign aid to enhance its objectives. The two types differ because each of them has specific aims and objectives. Bilateral development assistance programs are mainly used to enhance sustainable financial growth and socio-political strength in the third world.
The funds released through this program are managed by the American agency, USAID. The funds are used to finance economic project, with long-term objectives. In the third world, the USAID uses the funds to promote microeconomic projects, which would help people sustain their own lives. Through the funds, various American dreams are achieved, such egalitarianism, ecological fortification, population control, and development of human wellbeing (Barston 56).
Development plans that have received more fame in modern years consist of fundamental education, water and hygiene, and support for management of HIV/AIDS and other communicable infections. Additional bilateral assistance is channeled to specific agencies such as African Development Foundation, the Peace Corps, Inter-American, Millennium Challenge Corporation, and Trade and Development Agency. Bilateral assistance has been used variously to advance the American objectives.
For instance in Kenya, the US government collaborated with the World Bank and International Monetary Fund to introduce structural adjustment programs. The programs were aimed at opening up society in 1986 and creating an enabling environment for individual fulfillment. It can be reported that bilateral assistance has been successful in fulfilling the American objectives.
On the other hand, the US has not been using multilateral form of assistance. A small share of the total funds is allocated to multilateral assistance. Multilateral funds are used jointly with funds from other states to fund social services. It can be observed that, the US rarely uses multilateral type of assistance because the national interests are not achieved.
Foreign Aid Programs The Marshal Plan was aimed at reconstructing Europe after the Second World War. Europe had suffered huge losses since many people were killed while others were wounded. Many companies and factories in England, France, Germany, Italy, Poland and other parts of Europe had been destroyed. Europe could not exercise agriculture because farmers had been destabilized by the war.
Infrastructure was badly affected implying that goods could not be moved from one part of the region to the other. Between 1945 and 1947, the US came up with foreign direct investment programs to rebuild Europe. Through the UN, the US offered humanitarian aid to Greece. The Head of state, Harry Truman, appointed an expert named George Marshal.
The program under Marshal was named the European Recovery Program. The program was mainly aimed at rebuilding economies of the European states. The US government offered technical assistances and administrative advises to states in need such as Germany and Poland. In total, the European states received $13 billion, which involved relief food, fuel and farm machinery.
Not sure if you can write a paper on American Foreign Aid by yourself? We can help you for only $16.05 $11/page Learn More The program was terminated in 1951 after realizing that all European states were stable. From the program, the US government benefited a lot because US firms could easily produce and distribute goods in the European continent. It can be observed that the program was successful because the American national interests were achieved.
Point Four program was another foreign aid assistance that aimed at uplifting the lives of the poor in the third world during the cold war. It was aimed providing technical skills and knowledge to the policy makers of the third world. Through the program, investment capital would move freely from the industrialize states to the less developed. The program was the fourth in President Truman’s agenda launched in 1949.
This was upon realization that Europe was already under the American control. The program would give the US access to the economies of developing nations, especially in Africa and South Asia. During the Cold War period, the policy was effectively used to win the states that were still confused on whether to adopt capitalism or communism.
Public Law 480 (PL 480) was a food program that was aimed at assisting the developing countries faced by food shortages. The program has four major parts, the first part is managed by the US department of Agriculture while the three parts are managed by the USAID. Dwight Eisenhower signed the program into law in 1954.
The main aim of the law was give American farmers a chance to export their products to countries facing deficiencies. Through the program, American farmers were able to invest abroad since their commodities could be exchanged with other products. In 1961, F. Kennedy redefined the program, by renaming it Food for Peace.
The US government could use the aid to demand for transparency and openness in the foreign states. Good governance was liberalization of the economy was one of the requirements in case a particular state was to benefit from the program after the Cold War. During the Cold War, states could receive the aid by supporting American ideologies. In 1991, the US used the program to bar African states from attending an economic conference that would have affected American businesses in the continent (Domingo 13).
Economic Support Funds are meant to help states recovering from wars, especially those in Africa. The US government would come up with various strategies on how to help the third world country to develop. The US utilizes this chance to achieve its national interests. For instance, trade barriers barring the US from accessing the economies of the third world are always reviewed during the formulation of policies. American businesspersons are always represented in key decision-making agencies in the third world.
Works Cited Barston, Ronald. Modern diplomacy. New York, NY: Pearson Education, 2006. Print
Calvocoressi, Ambrose. World Politics since 1945. 9th ed. New York: Longman, 2008. Print.
Domingo, Richard. The New Global Law. New York: Cambridge University Press, 2003. Print.
Analysis of the Third World Debt Crisis and Its Causes Essay
Nursing Assignment Help Table of Contents Introduction
Causes of the Debt Crisis
Introduction Economic development requires investment by the government in infrastructure and other sectors that will help in propelling growth. Unfortunately, less developed countries most of the times are unable to raise the required capital for development from the local savings because their saving rates are low. Therefore, these countries always borrow money from either developed countries or international financial institutions to fund the deficits in their budgets.
However, due to industrial inability and technological deficiency, third world countries export mostly raw materials which generate low income that fully repay the loans these countries receive. Consequently, the debt level of the less developed countries has been escalating year in year out making this countries use larger and larger proportions of their budgets each year to service debts.
Causes of the Debt Crisis Debt crisis of the developing countries can be attributed to many issues both internal and external. Much as the developed nations and the international donors are to blame for the problems facing the developing countries, third world countries also share the blame due lack of proper debt management policies. To begin with, most third world countries have very poor economic management policies making these countries invest in unworthy projects (Reitan 67).
It is prudential that when a project is financed by borrowed funds, then returns from the project should be able to service the loan. However, this is not the case in developing countries due to poor investment decisions compelling the government to pay the loans using money from other sources.
On top of that, most third world countries are governed by leaders who usually put their personal interests first as opposed to national interests. It has been proved that corruption levels in Africa and Latin America are high and keep on increasing each year. Consequently, it is not unusual for borrowed funds that were meant to finance various national projects to be diverted into the pockets of few politicians or influential people in the government (Jochnick and Fraser 37).
Therefore, the country continues to pay for loans that were never invested in any project or if they were invested then the project stalled on the way and requires more money to be completed. Furthermore, the problem of corruption escalates because the stolen funds are usually not invested in the third world countries to boost their economy but are instead stuck in European countries.
Furthermore, most developing nations export raw materials either due to lack of industries to process the raw material or lack of technology. The raw products are highly undervalued in the international markets thus fetching very low income for these countries, which cannot fund the loans let alone the countries’ whole budgets.
Get your 100% original paper on any topic done in as little as 3 hours Learn More This problem is worsened by the fact that third world countries import finished products from the developed nations which are very expensive, and drain up all the income from the exports thus limiting the ability of these countries to save any money (Reitan 68). On the same note, third world countries are technologically behind and they do not produce most commodities which make them net importers further exacerbate the situation.
In conjunction with that, the debt crisis that is facing developing nations has also been precipitated by some external forces which are even strong and beyond the control of these countries. Firstly, there have been very poor lending policies that have placed the interests of the developed nations, especially Europe and unite states of America, in the forefront disregarding the effects that this may cause to developing nations.
The international monetary institutions have, in the name of determining the ability of a country to pay back their loans, imposed tough conditions which have reduced developing nations to being subjects of foreign forces both politically and economically (Rajagopal 34).
Using this as a weapon, developed nations have manipulated third world countries to become entirely dependent on loans from them. Additionally, since 1979 and more significantly from 1982, international monetary institutions including the IMF and World Bank imposed one sided lending conditions as prerequisites for them to offer loans to third world countries.
This served only to escalate the indebtedness of the sub-Saharan African nations and other third world countries. The servicing of these debts not only exhausts the earnings from exports but also makes developing countries to allocate portions of national incomes to debt servicing.
On the same note, the developed nations through international monetary authorities compelled developing nations to devalue their currencies drastically in 1980s. This action not only made imports very expensive for developing countries, but also made loan repayments very costly. To fund the deficit that this caused in the budgets of developing countries, governments were forced to increase borrowing which further increased the indebtedness of these countries.
In addition to that, the Oil crisis of 1973 created surplus income for developed nations of Europe and United States of America (Jochnick and Fraser 39). In order to eliminate the surplus that was present in their banks, Europe and America invested this money in form of loans to developing nations at generously low but fluctuating interest rates.
We will write a custom Essay on Analysis of the Third World Debt Crisis and Its Causes specifically for you! Get your first paper with 15% OFF Learn More Third world countries took advantage of this and borrowed in large amounts. However, this money was either misappropriated or poorly invested in projects whose economic returns would not service the loans thus increasing the loan burden.
On the other hand, the repayment of the loans from the oil crisis was seriously hindered in the 1980’s due to the devaluation of the third world countries’ currencies as a result of fluctuating interest rates, and the sharp increase in interest rates. On top of that, terms of trade of developing countries, especially sub-Saharan Africa, deteriorated while at the same time developed nations implemented protectionist policies that condensed markets for raw products exported by developing countries.
Moreover, the World Bank and the international monetary fund implemented Structural adjustment program, during 1980s, in what was termed as efforts to help developing nations catch up with their developed counterparts. This involved eliminating of controls on retail and producer prices, restructuring of public institutions, liberalization of trade and exchange systems as well as broadening the tax base.
Contrary to the expectations, this increased the burden on the poor person and instead of alleviating the economic problems of developing nations, the programs only protected economies of rich countries (Rajagopal 36). This placed the rich countries in a position to set rules about loans while the entire burden was shifted to developing countries.
Conclusion Developing countries continue to struggle with servicing loans that were advanced to them as early as 1980s, yet the projects that were funded using the money are nonexistent.
However, much as many countries are trying to find a way out of the debt predicament, this requires the joint efforts of the international monetary institutions, the developed nations and the political will of the third world countries. Unfortunately, changes might take long to be realized especially in Africa, because though elections are carried out regularly, leaders remain the same corrupt ones who have for years mismanaged public funds.
Works Cited Jochnick, Chris, and Fraser Preston. Sovereign Debt at Crossroads: Challenges and proposals for Resolving the Third World Debt Crisis. Oxford: Oxford University Press, 2006. Print.
Rajagopal, Balakrishnan. International Law from Below: Development, Social Movements, and Third World. Cambridge: Cambridge University Press, 2003. Print.
Not sure if you can write a paper on Analysis of the Third World Debt Crisis and Its Causes by yourself? We can help you for only $16.05 $11/page Learn More Reitan, Ruth. Global Activism. New York: Taylor and Francis, 2007. Print.