The New Environment of Foreign Aid
This article originally appeared in the issue of May 15, 1972.
Foreign aid is not dead but it seemed so last month, as the International Development Conference (a meeting of foreign aid experts that has been held in fifteen of the last twenty years) opened here in a distinct atmosphere of post-mortem. The only major mention of foreign aid in a Presidential campaign has been by Wallace, and his swipes at it went unrefuted. In Santiago, Chile, a few days earlier, World Bank director, Robert S. McNamara, had told the United Nations Conference on Trade and Development that the state of development in most poor countries was "unacceptable--and growing more so."
Treasury Secretary John Connally had spoken of the need for the U.S. Government to join forces with American-owned multi-national corporations to insure their access to raw materials. In Delhi, his Under Secretary, Charles Walker, told the Indians--who exist on 13¢ a day--that their needs faced stiff competition from growing U.S. domestic problems.
At the International Development Conference itself, James P. Grant of the Overseas Development Council warned that the "coincidence of the coming global job crisis with Peking's legitimation on the world scene," coupled with neo-isolationism in America, greatly improved "the attractiveness of the Maoist model to many in the developing countries."
As if an echo, Mahbub ul Haq, a senior economic adviser in the World Bank, said, "the developing world would have been better off" had it not received the limited sums of aid in recent years. Emphasizing that he spoke for himself, not the bank, Haq proposed that the poor nations "serve notice" on the rich that they cannot pay their present $60 billion debt and that steps must be taken for its "orderly cancellation." He predicted that many poor countries may follow the Chinese model of "how to achieve full employment and equitable income distribution at a relatively low level of per capita income." The poor countries he said, were "passing through a very dark aid ugly mood" and there might be "violent political explosions" and "a turn toward socialism."
As if this weren't enough, most of foreign aid's old liberal constituency seemed to have defected to the environmentalists. The International Development Conference had been upstaged a month earlier by the computerized prediction from the M.I.T. team of the Club of Rome that present population growth rates, seeking projected increases in production and consumption, will expose the planet to irreversible exhaustion--to overrun and collapse--within a century. The report has won national attention and provoked sharp debate. Anthony Lewis of The New York Times said that it was "likely to be one of the most important documents of our age."'
The shrinking band of foreign aid supporters, already backed to the wall by charges that aid was bad because it encouraged intervention and helped the rich but not the poor, braced themselves to face the argument that world growth was impossible because it would exhaust the planet. As Barbara Ward was to put it, the growing sentiment seemed to be, "Let us stop aiding and growing and stay home where we belong, minding our own business and looking after endangered species like the bald eagle." However, the conference soon discovered that, if cold-war motivations, Walt W. Rostow's theories of "take-off," and old modes of development could be swept into history, foreign aid is about to be given a new hold on life by a young generation of environmentalists whose discovery of a finite world and unified biosphere is leading them in unexpected directions.
What may have started with Lady Bird Johnson's distaste for litter has passed from environmental concerns to a value revolution. If the younger speakers at the conference voiced a readiness for less harried and consumptive, more thrifty and enjoyable, life styles at home, they were also beginning to see the wisdom of a massive shift of wealth and resources to the poor countries.
Among the young men and women at the conference the talk was not about whether or not to give aid but how to give it in such a way that it would reach the poor masses at society's bottom and allow them to preserve the traditional family, community, tribe and village structures now seen as preferable to modernization on advanced Western models.
By the end of the three-day conference and some sixty speeches, they had persuaded many of the old-timers to their views. Andrew Rice, of the Society for International Development, commented at the closing session: "The developing world is on the move and those of us who have been running things may not be running things much longer."
Surprisingly perhaps, Dennis L. Meadows, director of the Club of Rome's M.I.T. project, was the conference's most fervent and least apologetic advocate of aid. A technocrat and systems engineer, Meadows coolly dismissed past aid as "having a curiously narrow model in its definition of progress and its time perspective." The United States, he said, had moved into modernization from, a traditional, agricultural economy under six conditions: (1) A low population growth rate; (2) a low rate of agricultural innovation and slow migration to the towns; (3) low capital investment rates in industry of $200 per man; (4) high achievements and low expectations; (5) access to overseas markets, and (6) an almost unlimited base of natural resources and capacity for absorbing pollution.
"All these are missing from the poor countries today," he went on, saying they were faced with (1) high population growth stimulated by modern medicine; (2) a rate of technological agricultural change that telescopes 200 years of advance into five; (3) high capital investment rates of $2,000 per man; (4) high expectations and low achievements; (5) little access to overseas markets, partly because of the multi-national corporations, and (6) competition with the rich countries for finite resources and a pollution problem of global scope.
By trying to repeat the American experience in poor countries, Meadows said, "aid had the effect of moving small elites into industrialization and freezing the vast majority of the people in poverty."
"It was easy in the past to gloss over the ethical issues," he said, "because we assumed that what worked for us, will work for them." He noted that a World Bank study had revealed there was "no connection whatsoever between absolute income and distribution of income within a society." In the future, he said, "we have to deal directly with the problem of income distribution; a small fraction of the world continues to use a large fraction of the world's resources.''
In his matter-of-fact, technician's manner and without a trace of traditional altruistic rhetoric, Meadows concluded: "The poor countries are in serious trouble. Many are faced with breakdown. There should be a bigger flow of resources and technology from the rich countries to the poor. We're going to have to sit down and rethink the distribution of world wealth and how to increase the flow of aid."
Theodore Geiger of the National Planning Association proffered a theory that may help explain the emergence of young planners like Dr. Meadows. Geiger said that older Americans felt guilty because of Vietnam and were disappointed that twenty years of aid had failed to produce expected results. "We are now in the first stage of guilt," Geiger said, "when foreign aid occupies a very low place in the minds .of the leaders of this country. But in the course of the 1970s, there will be a return to foreign aid in even larger amounts, based on the second stage of guilt, when we blame failure on the inadequacy of previous efforts and feel our goals were wrong."
Meadows and the other environmentalists at the conference seemed to be in the second stage already, although "guilt" is probably the wrong word for them, since they expressed almost none of the do-good sentiments of the 1950s and 1960s. but seemed to be motivated by a practical, almost mathematical, sense of self-interest in global survival.
Older voices at the conference were also beginning to speak like environmentalists. Barbara Ward said, "Both in commerce and morals one can always cheat. One can give up trading and give up aiding. But with the biosphere we cannot cheat. Our territorial waters this week, full of our effluents, oil bilge, nitrates and DDT, are somebody else's territorial waters a week from now, as the oceans restlessly wash 'earth's human shores.'
"The airs and climates, the global exchanges of temperature, the consequences of a steady increase in thermal pollution--all these things plunge us into inescapable planetary unity which no amount of staying home and minding our business will cancel."
Lester Brown, perhaps the country's leading authority on the transfer of agricultural technology to the poor countries, told the conference, "The environmental crisis and global poverty are beginning to come together. We're beginning to realize that resources--oil, mineral reserves, fresh water--are all in finite supply."
Brown noted that population growth rates fall only in the presence of economic and social advance and said, "We must begin seriously thinking how to raise the income levels of two-thirds who are still below $100 a year incomes. There is a new tie of mutual interest with the environmentalists and we must find how to get more economic development with less. The North American life style is not a realistic one for all mankind--we would have to have a sixfold increase in the consumption of resources."
Congressmen and White House staffers have been jostling to see who will go to the world environmental conference at Stockholm in June, since the issue apparently offers lots of political mileage. They may regret their eagerness once they get there, for the redistribution of world income and resources--that is, foreign aid in its new guise--is likely to be the hottest issue on the agenda. And they may arrive ill-prepared to hold their own in the debate. Little about the development conference found its way into the Washington press, preoccupied as it was that week with the Apollo moon walk, campus demonstrations, battlefront reports from Vietnam and the election campaign.
Although Presidents Truman and Kennedy addressed the conference in foreign aid's heyday, and at least a Secretary of State or a top White House adviser has usually been on hand to convey Administration policy, President Nixon declined to send anyone this year. Logically, it would have been Peter M. Flanigan who, as head of the Council on International Economic Policy, is technically Nixon's man on the poor countries. Instead, the President sent a brief message, noting that "in a time of re-examination, many of "the underlying assumptions concerning development assistance are being reconsidered."
John A. Hannah, already on the program in his capacity as head of the Agency for International Development, was designated the Administration's spokesman and briefed at the White House. Somewhat apologetically, Hannah conveyed the Administration's promise that it would probably support proposals giving the poor countries "special access" to the International Monetary Fund's special drawing rights--a new kind of world reserve asset. Expressing concern about mounting debt repayments by the poor countries--they now total about $6 billion a year and are rising twice as fast as export earnings--Hannah said "multi-national debt relief agreements can become a substantial source of external finance for individual developing countries with large debt problems."
The only White House aide present, Robert Hormats, a junior economist on the National Security Council's staff, said he felt "something could be worked out" to provide more special drawing rights to the poor countries, "if the experts put their minds to it.'' Hormats also said he expected "a good deal more" debt rescheduling during the 1970s, even though this could be a "dangerous" practice.
Such slim pickings left the field pretty much open to Nixon's foreign policy critics. Sen. Edward Kennedy urged that foreign aid be increased to at least 1 per cent of GNP, along with wholesale reform of the international monetary system, more poor country representation and an all-out attack on the growing number of protectionists. He said Nixon's "new five-power concept" showed "an almost total disregard for the massive needs of people in the Third World. It is a theory of great power games, instead of great power concern--a theory which divides people, instead of bringing them together."
Baxbara Ward, perhaps warming up for Stockholm, where her new book, Only One World, will be one of the main papers, told the conference, "These are discouraging days" when "Presidents and Premiers travel the planet andencounter one another like medieval monarchs to discuss power and influence." She compared Henry A. Kissinger to "Metternich trying to hold the old world together before it blew up in 1849."
In an apparent reference to Secretary Connally, Miss Ward said, "The richest country in human history, the . United States--in which 6 per cent of the world's people consume at the most conservative estimate at least 32 per cent of the world's resources--proclaims through its official financial spokesmen that it is time to play things tough and defend American interests and stop all the generosity which has undermined the economy and the dollar." She compared the United States to "the elephant at the water hole who keeps others away and never knows he is ruining the water," adding wryly, "I use the word, 'elephant,' by coincidence."
Or as Meadows, with his computerized projections, put it, "The horrible straits of the poor are ethically and politically unviable."