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A Brief History of U. S. Foreign Aid 


Foreign aid, which can be defined as the transfer of money, goods, and services from one country to another, is an important part of U.S. foreign policy. It began during and following World War II when it was used primarily to help rebuild the economies of Western Europe and to help contain the Soviet expansion in the aftermath of World War II.

Important tools for foreign aid were established shortly after the war. In 1945, the U.S. along with other countries, established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) as the two main multilateral institutions that would help with debt relief and economic development. The Marshall Plan was announced in June of 1947 by General George C. Marshall, then U.S. Secretary of State. The plan sought to provide funds for rebuilding the countries in Europe which lay in ruins following the war. Marshall had said that the real enemies of democracy were "hunger, poverty, desperation, and chaos." With foreign aid, the U. S. hoped to not only help countries rebuild while containing the Soviet expansion, but also to strengthen U. S. ties with the recipient countries. The Marshall Plan, also known as the European Recovery Program, was considered a great success. By the early 1950s, Western and Central Europe, as well as Japan, had undergone a revitalization, and today Britain, Germany, France, Italy, and Japan are among the top industrial nations in the world.

Because of the success of the Marshall Plan, in his inauguration speech in 1949, President Harry Truman announced foreign aid as a component of U.S. foreign policy. He called it a "bold new program" to provide assistance to developing countries. However, it was not until President John Kennedy established the U. S. Agency for International Development (USAID) in 1961 that the U. S. had an actual agency to administer foreign aid assistance. President Kennedy also established the Peace Corps during his presidency to encourage young Americans to volunteer abroad to help improve life in the less-developed countries of the world.

During the 1960s and 1970s, foreign aid spending shifted from Western Europe and Japan to U. S. military allies in the Middle East and Asia and to poor countries in sub-Saharan Africa and south Asia. Again it was seen as a way to stop the spread of communism and to promote peace in the Middle East. The Camp David accords of 1979, with Jimmy Carter as president, helped to end hostilities between Israel and Egypt. In this accord, the U. S. promised to provide economic and military assistance to both Israel and Egypt. Most of the aid has been used by these countries to purchase American-made weapons.

In the 1980s, during the presidencies of Ronald Reagan and George H. W. Bush, a distrust of foreign aid gradually developed following reports of misuse and mismanagement of funds in some foreign countries. Aid was used during these administrations primarily to promote American investment, market economies, and national interests, and again, to protect other countries from Communist influence. The mid-80s began a downward trend in U.S. foreign aid, and this trend continued. The end of the Cold War began with the collapse of the Berlin Wall in 1989 and concluded with the breakup of the Soviet Union into 15 sovereign countries in 1991.

During the 1990s, the end of the Cold War led to cuts in foreign aid spending. During President Clinton's two terms, he stressed the importance of overseas development assistance and overturned some of the restrictions placed on foreign aid by Presidents Reagan and Bush, many of which related to abortions allowed in certain countries. In 1997, Sen. Jesse Helms tried unsuccessfully to downsize the USAID agency.

The September 11th terrorist attacks on New York City and the Pentagon in 2001 created renewed interest in foreign aid, this time as a potential deterrent to terrorism. In 2002, President George W. Bush promised $4.5 billion in aid to Afghanistan. During that same year, President Bush joined with 50 other nations in endorsing the United Nations' Millennium Development goals which include halving poverty in the world by 2015, improving literacy, women's rights, maternal and child health and environmental quality, and combating AIDS and other diseases. These lofty goals carry a hefty price tag, however, which requires richer nations to increase their levels of foreign aid.

The U.S. invasion of Iraq in March of 2003, under the leadership of President George W. Bush, has again brought attention to U.S. foreign aid policy. Reconstruction costs in Iraq now exceed all other U.S. foreign aid spending, and fighting terrorism is now seen as the leading goal of American foreign aid efforts. The U. S. assistance program to Iraq remains the largest aid initiative since the Marshall Plan of 1947. As of February 2005, over $150 billion have been spent on the war in Iraq.

Disaster relief remains a key part of U. S. foreign aid and is given as circumstances warrant. For example, the December 2004 earthquake and resulting tsunami that devistated parts of South and Southeast Asia prompted a $350 million pledge by the United States for the relief and recovery effort.

Nowels. 15 Apr. 2004. 20 Oct. 2004 <http://fpc.state.gov/documents/organization/31987.pdf>.