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What's Foreign Aid? Why Does the U.S. Provide It?

Nicaragua, Cuba, Venezuela and North Korea

Economically speaking, Nicaragua ($44,457,000 in U.S. assistance), Cuba ($20,000,000 in U.S. assistance), Venezuela ($5,000,000 in U.S. assistance) and North Korea ($2,500,000 in U.S. assistance) are doing poorly to horribly. With dictatorial governments and economic systems, they are not likely to be helped in ways beneficial to the United States by any form or amount of U.S. assistance to their governments. To the extent that assistance is provided, it almost certainly helps their leaders in their activities contrary to the interests of their subjects as well as contrary to those of the United States and of her remaining allies.

Venezuela is tightly controlled by el Presidente Chávez, who has for years been trying with success to expand his influence in South and Central America. With few exceptions, he has gained significant influence.

Venezuela and Iran have been assisting Nicaragua to develop a canal to connect her Atlantic and Pacific coasts. That has long been considered feasible and was one of the alternatives explored prior to the construction of the Panamá Canal. There are substantial questions about its viability, due in part to the severe weather common at that latitude and along the trade routes, particularly during hurricane season. From the perspective of United States security, the alliance between Iran and Venezuela is itself potentially dangerous.

North Korea is self-evidently dangerous to the United States as well as to the rest of the world. Any assistance from the United States, even a measly $2.5 million, will fail to alleviate the suffering of the Kim regime's subjects and will in the long term merely delay the departure of the regime. The same will be true should North Korea succeed in obtaining United Nations registration under the Clean Development Mechanism for its hydroelectric facilities. "This scheme allows developing countries to earn tradeable carbon credits for emissions reductions from clean-energy projects." There is obviously legitimate concern that the funds likely to be obtained from carbon credit sales (roughly 276,000 euros annually) would go to nuclear arms and other military ventures. China, always looking for ways to keep the DPRK in line for its own purposes, seems likely to push this initiative forward.

Costs are important, but by no means the only factors to be considered.

We should give serious thought to terminating aid to the countries above, and also look closely at aid to many others. Libya? $875 million is peanuts. Depending on what happens there it should be stopped or increased. Iran? Zero. We did not support the insurgents there last year; maybe the time to do so has come. It's a bit late and much earlier would have been better, but still...

Attention should also be paid to the various purposes for which aid is given. For example, climate change assistance makes little sense and seems more likely to retard than to stimulate economies. Such initiatives have had the former effect in the United States.

The total funds provided worldwide are not, relatively speaking, staggering; at fifteen billion dollars, they would be "only" about one percent of the estimated 2011 budget deficit. Even double that amount would be "only" two percent. However, with only about forty-seven percent of the 115,000,000 U.S. households paying income taxes, roughly fifty-seven and one half million households pay; based on fifteen billion dollars in foreign aid, that would amount to about $260 per tax-paying U.S. household. Since collections for the Social Security "trust fund" actually go into the general fund with other tax dollars, the amount per household may well be higher.

The direct aid funds provided to Afghanistan, Pakistan, Egypt, Zimbabwe, Somalia, Russia, China, Nicaragua, Cuba, Venezuela and North Korea totals about nine billion dollars or 0.60% of our budget deficit. Were the aid to those countries benefiting the United States significantly, it might be worth the cost. Some of it seems not to be and even "small change" adds up, at least for those actually footing the bill.