Reality of Foreign Aid is to cause Dependency INTRODUCTION Since the Second World War foreign aid has been one of the most prominent policy tools that high income countries use for assisting low income countries to increase economic growth to improve well-being and institutional developmentIn a 1970 resolution, the United Nations General Assembly specified that rich countries should aim to give 0.7% of their GNP to poor countries in the form of official development aid (ODA) 1“In recognition of the special importance of the role that can be fulfilled only by official development assistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 percent of its gross national product at market prices by the middle of the decade.”

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1Resolution adopted by the General Assembly 2626 (XXV). International Development Strategy for the Second United Nations Development Decade Distr: General 24 October 1970 Foreign aid can involve a transfer of financial resources or commodities like food , military equipment or technical advice and training The most common type of foreign aid is official development assistance (ODA) which is assistance given to promote development and to reduced poverty foreign aid can be bilateral from one country to another, sometime aid is in form of loans, and sometimes the aid is giving to the poor countries by international organizations and nongovernmental organizations For example the International Monetary Fund (IMF), the World Bank, and the United Nations Children’s Fund (UNICEF) have provided significant amounts of aid Countries provide foreign aid to enhance their own security foreign aid may be used to prevent friendly governments from falling under the influence of unfriendly governments and for use military bases on foreign soil for their own interest Foreign aid also may be used to achieve a countries diplomatic goals.

Countries provide foreign aid to enhance their own security foreign aid may be used to prevent friendly governments from falling under the influence of unfriendly governments and for use military bases on foreign soil for their own interest Foreign aid also may be used to achieve a countries diplomatic goals. Countries gives foreign aid to other countries for promoting their exports and by that bind recipient country to use the aid to purchase the donor country’s agricultural products or manufactured goods and spreading its language, culture, or religion Countries also provide aid to relieve suffering caused by natural or man-made disasters such as famine, disease, and war, to promote economic development, to help establish or strengthen political institutionsHistory of foreign aid Prior to World War II foreign aid and state to state assistance and loans were very limited and only given

in to emergency situations but during and after World War I2 The United States government became directly involved in disaster relief assisting German-occupied Belgium and sending $20 million to Russian famine victims in 1921 Also U.S Helped rebuild Germany and other countries in 1932 Franklin D. Roosevelt promised that military aid continued to flow throughout the interwar years to US friendly neighbouring countries, including Cuba, Mexico, and Nicaragua. During World War II, moreover American also set up the Institute of Inter-American Affairs which provided food and sanitation assistance in Latin America. In the late 1930s America developed a Western Hemisphere Defences Program which US Army School of the Americas that provides military training to government personnel in US-allied Latin American nations It was the first major U.S. effort to export arms outside Latin America these initiatives were all defence measures 2Foreign Aid and the Legacy of Harry S. Truman edited by Raymond H. Geselbrach page34

In 1943 to 1951 America provide $6.1 billion to Relief in Occupied Areas. In the immediate aftermath of the war, the United States also sent military surplus items to France, Britain, Nationalist China, and the Philippines, where it maintained bases following independence in 1946Also during World War II, the Bretton Woods Conference led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development after called as the World Bank, two key instruments of

economic relief and reconstruction that were aimed at ending Great Depression and the war effects The IMF established the dollar as the international currency, facilitated international trade, and made loans to governments the World Bank ensured that foreign investment in developing areas are less risky and gives loans for reconstruction and development projects, and promoting investment and international trade. The United States dominated both organizations in 1945 holding one-third of the votes in each and supplying one-third of the financing of the bank at century's end, the United States still supplied one-fifth of all IMF funds, and these institutions and their policies continued to generate controversy. Rich countries started giving money to poorer countries in the 19th century, and by the 1920s and 1930s countries like Germany, France and Britain were providing regular aid to their colonies in Africa, Latin America and Asia. Colonial powers used their money to build infrastructure ports, roads, railways in the period of cold war The United States also used foreign aid to promote free-market standards for development, including the integration of West European economies and to stop the economic protectionism these efforts were designed to prevent the spread of international communism

And after that America announce the Truman Doctrine in March 1947 to provide the U.S. assistance for Greece and Turkey to stop the communist domination of the

two nations the United States proposed the Marshall Plan April 1948 or European Recovery Program, in response to the post-war economic crisis in western Europe The Marshall Plan provided a $12 billion package to sixteen countries in western Europe 3The United States and the recipient countries created the Organisation for European Economic Cooperation (OEEC – it became the OECD in 1961) to coordinate the use of the aid. A large portion of the money given was used to purchase goods from the United States, and the ships used to transport the goods had to be of U.S. nationality. Until after the Korean War, military aid was not part of the plan4 The United States government gave out about $12.5 billion under the Plan during its three-and-a-half year existence. The countries receiving the most were Great Britain ($3.3 billion), France ($2.3 billion) and West Germany ($1.4 billionIn October 1949 United States had officially joined NATO The point four programme was also launch in 20 January 1949 it was assistance program for developing countries announced by United States 5U.S. foreign aid project aimed at providing technological skills, knowledge, and equipment to poor nations throughout the world. The program also encouraged the flow of private investment capital to these nations

3 UNITED STATES FOREIGN AID eBooks from World Public Library are sponsored by the World Public Library Association 4The Marshall Plan Fifty Years Later (Palgrave MacMillan, 2001)  5 "Point Four." Dictionary of American History.2003.Encyclopedia.com<http://www.encyclopedia.com

Foreign aid concern The nature of foreign aid caused political dependency donor countries intervene in the internal affairs of recipient countries Donors need to satisfy their interests, and values donor countries intervening directly  in policymaking and implementation of recipients countries

Due to Foreign aid weaker countries are economically reliant on stronger countries and stronger countries exercise significant control over the weaker countries economic and political behaviour these dependency generally on dependent country mostly foreign aid are provided to  Less-developed countries are often former colonies whose countries and they focused on the production of raw materials for the manufacturing industries of their own and underdeveloped countries so these countries continued to export cheap raw

materials to former colonial powers for just only the seek of foreign aid The industrial countries then sold manufactured goods back to their former colonies at a profit because when countries give the loans the bind the recipient countries to purchase the good from donor countries which is not in the favour of third worldMuch of the international aid are provided to the countries are conditional for example in Afghanistan where us are providing aid but only the American companies are contracted to construct school infra structure build roads a poor country have to choice accept the dominance of American companiesModern imperialism After colonialism in its original form disappeared a new kind of imperialism arose Imperialism through debt. The decolonized countries where forced to rebuild their economy and country to exist to the parable of the Western world and to participate in the world economy. Because they couldn’t realize this on their own and had enormous debt via agencies like the World Bank or the IMF Because these countries couldn’t meet their financial obligations to the banks they got deferral and the possibility to get a new loan, something the new and the possibility to get a new loan, something the new corrupt or dictatorial rulers usually were happy to accept. The IMF and World Bank themselves create such corrupt leaders in third world countries The African Union estimated in 2002 that corruption costs the African continent approximately 150 billion dollars on a yearly basis. So why don't the international lenders open their eyes? The contemporary debt of these countries,  increased because of interest That most of these countries will never come out of debt They are infinitely dependent on the lenders and therefore the lenders possess the power in these countries

Why foreign aid is harmfulIncreased   Corruption

One of the most frequent criticisms of foreign aid it provide fuel to corruption in the countries that receive it.  Unnecessary bureaucracies  play their part to create dominancy of donor NGOS in the result of this make too easy for the funds to be used for anything or make corruption Increased   Debt

The significant debt burdens of  less developed countries have often  been incurred as a result of the foreign aid packages pushed by wealthier countries and Western institutions and pursued by corrupt and greedy politicians and businessmen in recipient countries.an over loaded aid create debt because of interest countries to accept enormous loans for  infrastructure development . The United States Government, WorldBank, International Monetary  Fund and other U.S. dominated aid agencies then have access to the   countries resources especially oil and strategic land and are also able to install military bases in recipient land AntiDemocraticWhen the more foreign aid came in country then the country government become weaker for example in Africa, over 70% of government income comes

from foreign aid  meaning that such administrations are seriously compromised with the interests of their populations Similarly  in donor countries billions of dollars of foreign aid money appropriated from their taxpayers but no clear, effective system has ever been created to check aid recipients and that how the money is spent so it is anti-democratic

Less Trade wealth CreationForeign aid creates poverty through economic institutions that systematically block all opportunities of poor people to make things better for themselves their neighbours and their country foreign Aid tends to delay the development of business in developing countries It has kept developing countries  behind in terms of getting the confidence they need the experience they need to take a full part in the global economy create businesses that  compete  globally  and  succeed  globally

Increased war

More than half of the international assistance spending in Afghanistan, Iraq, and Pakistan is for military or security uses. For example, some of the international assistance funds sent to Pakistan have been used to train their Frontier Corp in counter insurgencyDoes It Really Help The People?foreign aid to “poor countries “such Africa and South America. This type of foreign aid comes from the government, provided by taxpayer dollars. The aid can be put into two major categories: military aid and economic aid. If this aid is so vital and necessary, then why are most African countries who receive aid, much poorer now than they were 60 years ago? We need only compare them to countries such as Hong Kong, Taiwan, South Korea, Vietnam, and others who were also financially poor, but transformed into much more prosperous societies with little or no foreign aid. Because of corruption6How Much of Foreign Aid Dollars Are Spent on U.S. Goods? Most U.S. foreign aid is used to procure U.S. goods and services, although amounts of aid coming back to the United States different program. • USAID. Most USAID funding (Development Assistance, Global Health, Economic Support Fund) is implemented through grants and cooperative agreements with implementing partners. While many are sometimes awarded to firms from developed countries other than the United States, which has been a source of some controversy. • Multilateral development aid. Multilateral aid funds are mixed with funds from other nations and the bulk of the program is financed with

borrowed funds rather than direct government contributions. As a result, the U.S. share of procurement financed by MDBs may even exceed the amount of the U.S. contributionimplementing partner organizations are based in the United States and employ U.S. citizens, there is little information available about what portion of the funds used for program implementation are used for goods and services provided by American firms. • Food assistance commodities are purchased wholly in the United States, and generally required by law to be shipped by U.S. carriers,12 suggesting that the vast majority of food aid expenditures are made in the United States. • Foreign Military Financing, with the exception of certain assistance allocated to Israel, is used to procure U.S. military equipment and training • Millennium Challenge Corporation. The MCC uses procurement regulations established by the World Bank, which calls for an open and competitive process, with no preference given to donor country suppliers. As a result, MCC contracts

6Foreign Aid: An Introduction to U.S. Programs and Policy Curt Tarnoff Specialist in Foreign Affairs Marian Leonardo Lawson Analyst in Foreign Assistance February 10, 2011page 18