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Foreign Aid's Impact Is Felt Close to Home


WASHINGTON — U.S. foreign aid goes to places like Venezuela, not Valencia; Lithuania, not Lancaster; Pakistan, not Pasadena. Or at least that's what most people think.

With Congress approving massive cuts in the country's foreign assistance program, backers of the U.S. largess are attempting to correct what they call a common misunderstanding: that foreign aid benefits far-flung lands with no direct effect back home.

In fact, the U.S. Agency for International Development, which handles foreign development assistance, doles out close to 80% of its contracts and grants to U.S. firms--which in turn provide the food, supplies or assistance to recipient nations overseas.

That means that the significant cuts in foreign aid approved by the House and Senate earlier this year could hit closer to home than most people think, resulting in less business for U.S. companies and possibly fewer jobs, officials say.

From the San Fernando Valley and other local areas, there are contractors building houses in Russia, providing health education in El Salvador, improving the water in Egypt and upgrading government computer systems throughout the world--all funded by U.S. foreign aid.

A West Los Angeles firm, meanwhile, is using foreign assistance money to provide emergency health care in Rwanda, Sudan, Somalia and Bosnia. And Santa Monica's Rand Corp. is in the midst of a government-funded project to collect demographic data in Indonesia.

"We have a Congress full of a lot of people who don't want to even hear the words 'foreign assistance,' " said Jay Byrne, a spokesman for the Agency for International Development. "When they say foreign aid is money going down a rat hole, the fact is that that 'rat hole' could be their district."

Byrne was referring to the comments of U.S. Sen. Jesse Helms (R-N.C.), one of the foremost critics of foreign aid. As the chairman of the Senate Foreign Relations Committee, Helms has said that one of his priorities this year will be to save taxpayer dollars from being poured down "foreign rat holes."


Both the House and Senate have approved significant cuts in foreign aid, particularly to Africa and the former Soviet Union. The House bill would cut $2.8 billion from a $21.6-billion foreign affairs budget that Secretary of State Warren Christopher has said is already at "rock bottom." It would abolish the USAID and two other agencies outright, merging them with the State Department, and it would reduce funding by more than 50% to the International Development Assn., the World Bank affiliate that provides loans to poor nations.

The Senate has approved similar cuts, and lawmakers from the two chambers are negotiating to work out differences. President Clinton, meanwhile, has threatened to veto the bills because of the controversial consolidations of USAID, the United States Information Agency and the Arms Control and Disarmament Agency into the State Department.

Currently, U.S. foreign aid represents about 0.7% of the federal budget, and the United States ranks second behind Japan in total expenditure but last among the 21 industrialized donor nations in the proportion of its gross national product allocated for foreign aid.

With the reductions looming, the USAID has sent letters to contractors preparing them for fewer contracts in the future.

DevTech Migrations of Valencia, fortunately, just completed a major project upgrading the computer systems at USAID's worldwide network of missions. Even before the budget cuts, the company was not counting on much more foreign work, said Ed Offstein, vice president of sales and marketing.


The Parsons Corp. in Pasadena is building 2,500 housing units throughout Russia, designed for demobilized soldiers returning from the Baltics and other regions. Company officials express optimism that they will be selected for some of the projects that continue to receive funding.

"While it's true that USAID projects have benefited both foreign countries and U.S. companies such as Parsons, it also is clear that, in these times of shrinking budgets and limited resources, only cost-efficient projects which provide the most good for the most people should be considered," said Ralph DiSibio, Parsons' senior vice president.

The budget cuts could actually improve business for the International Medical Corps, but officials at the West Los Angeles nonprofit organization say that in their line of work, that is grim news.

"Our concern is that we're going to be deploying more and more of our staff to more and more disasters," said Stephen Tomlin, the organization's vice president for international operations. "The reduction of aid is going to impact development in Southern Hemisphere countries and the very fragile infrastructures are going to disintegrate. We think the budget cuts are extremely shortsighted."

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