[Congressional Record Volume 152, Number 78 (Friday, June 16, 2006)]
[Extensions of Remarks]
[Page E1185]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   THE IMPORTANCE OF U.S. FOREIGN AID

                                 ______
                                 

                         HON. CHARLES B. RANGEL

                              of new york

                    in the house of representatives

                         Friday, June 16, 2006

  Mr. RANGEL. Mr. Speaker, I rise today to enter into the Record, an 
article by Pulitzer Prize winning journalist Nicholas D. Kristof 
discussing the merits of U.S. foreign aid. In the article, titled 
Foreign Aid Has Flaws. So What?, published in the June 13, 2006 edition 
of the New York Times, Mr. Kristof demands a dialogue to increase the 
effectiveness of our foreign aid. It is good to see the subject of 
foreign aid being addressed in the New York Times editorial pages 
because there needs to be public education about the benefits of 
foreign aid for the poor and also for the United States.
  Eradicating global poverty is the first objective of the United 
Nation's Millennium Development Goals. With that in mind we must 
recognize the need for increasing the effectiveness of the money that 
is provided through foreign assistance programs every year. Mr. Kristof 
initiates his point by acknowledging the central reality that ``helping 
people can be much harder than it looks.'' For example, food assistance 
lowers prices in the markets of the recipient countries and continues 
the impact by discouraging local farmers from planting the next season.
  Economists have argued that aid can have adverse effects on a 
country's economic system. It pushes up the local exchange rates, 
discouraging local manufacturing; it breeds foreign assistance 
dependency by cutting down room for internal development of industries 
and opportunities. At the same time our aid saves lives. ``For pennies 
[we] can vaccinate a child and save his/her life. For only $5, [we] can 
buy a mosquito net and save several people from malaria.'' In Darfur we 
haven't done nearly enough to establish permanent peace and stability, 
but our aid has kept thousands of people alive.
  Keeping these facts in mind, my dear colleagues, I ask you all to 
join me in taking constructive steps to increase both the amount of 
U.S. foreign aid and the efficiency in distributing it to nations that 
are in dire need of assistance. We, as representatives of the most 
powerful nation of the world, must lead the way and work with 
international organizations that can share this burden with us.

                [From The New York Times, June 13, 2006]

                    Foreign Aid Has Flaws. So What?

                        (By Nicholas D. Kristof)

       Don't tell anyone, but a dirty little secret within the 
     foreign aid world is that aid often doesn't work very well.
       Now that truth has been aired (and sometimes exaggerated) 
     in a provocative new book by William Easterly, ``The White 
     Man's Burden.'' Mr. Easterly, a former World Bank official 
     who is now an economics professor at New York University, has 
     tossed a hand grenade at the world's bleeding hearts--and, 
     worst of all, he makes some valid points.
       Let me say right off that stingy Republicans should not 
     read this book. It might inflame their worst suspicions.
       But the rest of us should read it, because there is a 
     growing constituency for fighting global poverty, and we need 
     to figure out how to make that money more effective.
       I disagree with many of Professor Easterly's arguments, but 
     he's right about one central reality: helping people can be 
     much harder than it looks. When people are chronically 
     hungry, for example, shipping in food can actually make 
     things worse, because the imported food lowers prices and 
     thus discourages farmers from planting in the next season. 
     (That's why the United Nations, when spending aid money, 
     tries to buy food in the region rather than import it.)
       On one of my last trips to Darfur, I had dinner at a 
     restaurant in Nyala called K2. Out back were 18 big white 
     S.U.V.'s belonging to the U.N. and aid groups; that amounted 
     to nearly $1 million worth of vehicles, in a country where 
     people are starving.
       The aid workers are struggling heroically in a dangerous 
     and difficult place, and I don't begrudge them reliable 
     vehicles. But something seems wrong when international 
     agencies are more successful at maintaining S.U.V.'s than 
     clinics. (One reason is that budgeting is often done 
     annually, and one of the ways to spend a grant in a single 
     year is to buy a vehicle.)
       It's well-known that the countries that have succeeded best 
     in lifting people out of poverty (China, Singapore, Malaysia) 
     have received minimal aid, while many that have been flooded 
     with aid (Niger, Togo, Zambia) have ended up poorer. Thus 
     many economists accept that aid doesn't generally help poor 
     countries grow, but argue that it does stimulate growth in 
     poor countries with good governance. That was the conclusion 
     of a study in 2000 by Craig Burnside and David 
     Dollar. Professor Easterly repeated that study, using a 
     larger pool of data, and--alas--found no improvement even 
     in countries with good governance.
       Saddest of all, Raghuram Rajan and Arvind Subramanian of 
     the International Monetary Fund have found that ``aid inflows 
     have systematic adverse effects on a country's 
     competitiveness.'' One problem is that aid pushes up the 
     local exchange rate, discouraging local manufacturing. Mr. 
     Subramanian also argues that aid income can create the same 
     kinds of problems as oil income--that famous ``oil curse''--
     by breeding dependency and undermining local institutions.
       All these findings can be pretty shattering to a bleeding-
     heart American. But cheer up.
       Some other studies indicate that aid does improve growth 
     (economists don't agree about this any more than they agree 
     about anything else). And whatever the impact on economic 
     growth rates, aid definitely does something far more 
     important: it saves lives.
       For pennies, you can vaccinate a child and save his or her 
     life. For $5 you can buy a family a large mosquito net and 
     save several people from malaria. For $250, you can repair a 
     teenage girl's fistula, a common childbirth injury, and give 
     her a life again.
       The Center for Global Development, a Washington think tank, 
     has published a terrific book, ``Millions Saved,'' 
     demonstrating how health projects have saved lives. 
     Eradicating smallpox and reducing river blindness have 
     improved the lives of more people for less money than almost 
     any investment imaginable. In Darfur, we haven't done nearly 
     enough. But our aid shipments have kept alive hundreds of 
     thousands of people.
       For my whole adult life, I've sponsored children through 
     Plan USA, and in visiting my ``adopted'' child in places like 
     the Philippines and Sudan, I've seen how the kids' lives are 
     transformed by American sponsors. Aid is no panacea, but it 
     is a lifesaver.
       So let's not shy away from a conversation about the 
     effectiveness of aid. The problems are real, but so are the 
     millions of people alive today who wouldn't be if not for 
     aid. In the end, if we have tough conversations about foreign 
     aid, then I believe Americans will acknowledge the 
     challenges--and then, clear-eyed, agree to dig more deeply 
     than ever, for that is simply the best way we have of 
     asserting our own humanity.

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