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World View : Foreign Aid: When the Giving Hurts : Faced with economic woe and unemployment, nations are cutting back on their charity.


LONDON — As Britain's Cabinet minister in charge of overseas development, Baroness Chalker has traveled to Somalia, Bosnia, West Africa, Nepal and southern Africa since the first of the year viewing firsthand the needs of developing nations.

A former business executive, the minister returned home to argue the case for maintaining Britain's foreign aid outlays against tightfisted government budgeteers determined to cut spending.

Her department's role, she insisted, is "to improve the quality of life in developing countries."

But she is finding foreign aid to be a tough sell--and she is not alone.

The U.S. Congress is also calling for major cuts in the foreign aid budget of the Clinton Administration, and many other donor nations are reducing their contributions to developing countries.

Industrialized nations, traditionally the major donors of foreign aid, are financially strapped by the worldwide recession and other demands on their budgets--hence the dwindling support for foreign aid, which totaled $131 billion in 1991.

Some of the largest contributors per capita--like Sweden and Finland--are reducing their foreign aid budgets by more than 10%; Italy, the fifth-largest donor after the United States, Japan, France, and Germany, also has drastically cut its contribution amid charges of official corruption in dispensing aid funds, particularly in Somalia.

Few major governments, with the exception of Japan's, are increasing budgets or are likely to meet the foreign aid target of 0.7% of their gross national product set by the Paris-based, 25-member Organization for Economic Cooperation and Development (OECD). Meeting that standard would have pushed the U.S. foreign aid budget for 1991 from $11 billion to nearly $40 billion, for example.

In assessing the new directions in foreign aid, Alexander R. Love, chairman of the Development Assistance Committee of the OECD, calls the government cutbacks "very worrying."

Further, he and other aid specialists say, the outlook for near-term foreign aid increases for traditional recipients is very dim for a variety of reasons, not only because of the recession.

"Let's face it," observed a British aid specialist. "Foreign aid recipients were often dictated by security considerations--and competition between the Western states and the Communist countries for alliances in the developing world. Now that communism is no longer a threat, there will be changes in those foreign aid priorities."

The breakup of the Warsaw Pact and the Soviet Union into republics has seen many of the states, including Russia, change from net donors into net recipients. Now, enormous sums of money are earmarked by the West for Russia--last week's G-7 meeting in Tokyo promised a $43.4-billion package, including debt forgiveness.

Such aid outpourings may cut into the funds available for the developing nations, experts warn, and particularly for sub-Saharan Africa.

"In some cases, foreign aid direction has turned into a competition for funds between the East and the South," remarked a British diplomat.

In another drain on resources, the collapse of the Soviet empire and the resultant outbreak of ethnic violence in former Communist states have increased the funds allocated by governments to humanitarian and peacekeeping efforts.

"While peacekeeping costs are not directly linked to foreign aid budgets," said one Western expert, "there is only so much discretionary money available to governments--and the funds have to come from somewhere."

As a corollary, aid specialists note that the need for humanitarian assistance has risen in recent years because of civil conflict and natural disasters.

"We have seen a growing problem with continuing emergencies," says the OECD's Love. "Emergencies--drought, famine, civil unrest--get a priority claim on resources. Peacekeeping needs merge with humanitarian assistance. All these claims enter into the foreign aid equation."

What worries Love and other overseers of foreign aid is the fact that money and resources for short-term emergencies may come out of funds designated for long-term development projects.

They are fond of quoting the old saw: "Give a man a fish and he eats for a day; teach him to fish and he eats for life."

For example, almost half of the British private charity Oxfam's overseas grants are spent on emergencies--money that could be spent on long-term development and reducing poverty.

Modern foreign disbursements began after World War II when most U.S. aid went to Europe to rebuild the shattered Continent and then, after the beginning of the Cold War, to stave off communism.

As Europe recovered, the big donor nations were Western democracies, and much of the foreign aid went to Third World nations, largely into development projects.

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