Policy change could improve foreign aid

United States President Donald Trump is proposing to cut millions of dollars from the U.S. aid budget.

How will this affect the world’s poor?

The impact will be, to quote the President, “huge.”

The U.S. is the world’s biggest foreign aid donor, contributing nearly a quarter of development assistance provided by all major governments. Drastic cuts to the aid budget will have serious consequences for combating poverty and disease, protecting the rights of women and minorities, and addressing problems of a changing climate.

As the U.S. director of Norwegian Refugee Council put it: “The question is not if human lives will be lost as a result of President Trump’s decision to slash spending on foreign aid and diplomacy; the question is how many and how soon.”

Noting that the foreign aid budget is less than one percent of the overall U.S. federal budget, he added that “the potential savings do not justify the cost in terms of the lives lost and the negative impact on vulnerable people around the world.”

But the effects of the cuts won’t only be felt overseas; they could come back to haunt the U.S. and other western nations if poverty, disease, and conflict spread across international borders.

As American philanthropist and humanitarian Bill Gates pointed out, in response to the proposed aid cuts, the Ebola outbreak in West Africa that killed more than 11,000 people would have been much worse if health workers supported by American aid money had not helped to prevent the spread of the disease to neighboring Nigeria — an international travel hub that’s home to 180 million people.

But if Trump really wants to save money and reduce waste in foreign aid, there is an easy place to do it — one that aid groups would welcome and applaud. That way would be by untying U.S. food aid.

The U.S. is the world’s biggest food assistance donor, reaching about 46 million people every year, who face serious food shortages because of disasters and conflicts.

But legislative mandates in that country require that U.S. food aid is tied to American suppliers and shippers — it must be bought from American farmers and transported on U.S. ships, even if there are cheaper alternatives.

These locked-in inefficiencies have cost billions in American taxpayer dollars, and diminished America’s capacity to help the world’s most vulnerable people in places like Syria, Sudan, and northeastern Nigeria.

By untying its food aid — by allowing aid groups to use money from the U.S. to buy food closer to areas of needs, and not have to ship it from the U.S. — Americans could save an estimated US$400 million per year, or about a third of their country’s food aid budget.

Other major donor countries like Canada, the United Kingdom, France, Denmark, and the European Union have led the way by untying their food aid, and now primarily use locally and regionally sourced food assistance, along with cash and vouchers — so there are good models to follow.

There is support for this approach among U.S. lawmakers in both parties, and even the right-leaning American Enterprise Institute has endorsed it.

Unfortunately, it is unlikely to happen. The U.S. farm and shipping lobbies, which earn large amounts of money from the current tied-aid system, have succeeded in maintaining the status quo. And with Trump’s “America first” thinking, he will probably not want to eliminate a subsidy that supports American companies, even if it would make financial sense to do so.

Of course, the proposed budget is just that — a proposal. The cuts may not be passed by the U.S. Congress.

But regardless of what happens, the direction that the new President wants to take America has injected a lot of uncertainty into the world of foreign aid. It remains to be seen how other countries, including Canada, respond.

John Longhurst directs marketing and communications for the Canadian Foodgrains Bank.

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