U.S.-AID: U.S. Senate Clears Reduced Foreign Aid Bill

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Jul 26 1996 (IPS) - The Republican-dominated U.S. Senate Friday approved a 12.2-billion-dollar 1997 foreign aid bill which throws into question U.S. commitments to several global agencies, especially the World Bank’s International Development Association (IDA).

The Senate also voted 55-45 not to impose a unilateral investment ban against Burma and 96-3 to ban military training for the Mexican Army, pending the government’s arrest and prosecution or extradition of alleged drug kingpins.

The total amount approved Friday is 300 million dollars more than the version approved by the House of Representatives in May. But that total still falls 200 million dollars short of the 1996 aid budget and 700 million dollars below President Bill Clinton’s 12.9 billion dollar request.

U.S. foreign aid has been declining steadily over the past decade and has now reached the lowest level in real terms since the onset of the Cold War 50 years ago. Of all developed nations, the United States provides the least amount of aid as a percentage of its gross domestic product (GDP).

The Senate bill will now have to be reconciled with the 11.9- billion-dollar House version before it moves to the White House for Clinton’s signature or veto. Clinton has suggested he may veto the bill if it contains far-reaching curbs on spending for population programmes included in the House bill.

Like the House, the Senate approved more than five billion dollars in aid for Washington’s two main foreign aid clients, Israel and Egypt, and more than a billion dollars more for Eastern Europe and the new republics of the former Soviet Union.

The Senate also approved 700 million dollars for IDA, the World Bank agency which provides six billion dollars a year in no- interest loans to the world’s poorest nations.

While that was 175 million dollars more than approved in the House version, the IDA earmark still fell far short of Clinton’s request.

The 935 million dollars requested by Clinton was to clear all U.S. arrears to IDA’s 10th Replenishment, which expired last month. Other IDA donors agreed that Washington could delay contributions to IDA-11 until 1998 on condition that it clear its arrears in 1997 and that U.S. companies are barred from bidding on two billion dollars’ worth of IDA projects over the next year.

While the Clinton administration agreed to these terms, both houses of Congress have now balked, in part due to anger over the ban on U.S. bids for IDA procurement contracts. One key aide told IPS Friday that the other donors should reconsider the ban if they wanted to see Washington clear its arrears completely and begin contributing to IDA-11.

“While we understand why (the other donors) did what they did, it isn’t going to produce the result they want,” he said. “Somehow we have to persuade them to lift the ban.”

The Senate also declined to earmark any funds for the Africa Development Bank, the U.S.-sponsored Middle East Development, or the International Monetary Fund’s Enhanced Structural Adjustment Facility which, like IDA, provides credits to the world’s poorest countries.

The Senate also fell far short of a Clinton request of 100 million dollar request for the Global Environment Facility (GEF), which provides concessional aid to poor countries to address problems like ozone depletion and global warming. It approved 35 million dollars for the GEF, slightly more than the 30 million dollars in the House version.

That means Washington is contributing only about one-third of what it pledged to the two-year-old agency, which was created as the principal multilateral instrument for funding the environmental goals set out at the ‘Earth Summit’ in Rio in 1992.

On the other hand, the Clinton administration won a key vote on another multilateral facility, the new Korean Peninsula Energy Development Organisation (KEDO), a U.S.-inspired agency to ensure that North Korea dismantles its nuclear energy programme.

Washington pledged 25 million dollars a year for KEDO to help pay for heavy oil needed by North Korea while two South Korean- built plants are being built. But the Republican Congressional leadership, arguing that Clinton has not been tough enough in negotiations with Pyongyang, favoured approval of only 13 million dollars, the amount approved by the House. North Korea has hinted it may drop out of the KEDO accord if the U.S. does not follow through on its pledges.

The Senate, however, bowed to the administration’s arguments and approved the full amount Friday. The House and Senate will now have to hash out an agreement.

As for other multilateral programmes, the Senate turned in a mixed result.

Clinton had asked for 325 million dollars for U.N.-related programmes, including 90 million dollars for the U.N. Children’s Fund (UNICEF), 79 million dollars for the U.N. Development Programme (UNDP), 36 million dollars for the International Atomic Energy Agency (IAEA), and 30 million dollars for the U.N. Population Fund (UNFPA).

The House met the IAEA request and added 10 million dollars to UNICEF’s, leaving a balance of only 136 million dollars to be divvied up among all other agencies. Among other effects, according to the State Department, that would mean that UNDP, which has always been led by a U.S. national, would receive less than 79 million dollars.

Congressional cuts last year forced Washington to reduce its contribution to UNDP from 113 million dollars to only 52 million dollars in 1996. U.S. officials have since warned that failure to meet the 79 million dollars request would put at risk Washington’s leadership role in the agency.

To ensure that would not happen, the Senate Appropriations Committee approved 31 million dollars more than Clinton’s request for all U.N.-related programmes.

But the Senate Friday voted to add 53 million dollars to Washington’s international drug-control programme, 25 million dollars of which is supposed to be taken from contributions to U.N. agencies.

“We lost our cushion,” said one influential Democratic aide. “I don’t know how we’re going to reach all our U.N. agency targets now,” he said.

And, in a symbolic swipe against the United Nations, the Senate also voted 70-28 to cut off all U.S. contributions to the U.N. system if the cash-strapped world body tries to borrow money from international financial agencies or tax certain kinds of international transactions, such as airline tickets, to keep itself financially afloat.

“The United States must make clear that even the consideration of U.N. taxation is unacceptable,” said the provision’s chief sponsor, the far-right chairman of the Senate Foreign Relations Committee, Jesse Helms, who singled out UNDP chief James Gustave Speth for having proposed the creation of a “global human security” fund.

The United States currently owes the United Nations more than 1.5 billion dollars — a debt which has pushed to the world body close to bankruptcy.