What Foreign Aid Should Be

Tacitus points to an article on the Bush Administration’s new system for foreign aid. The system ties increases in foreign aid to nations that pass basic standards for economic freedom and have reduced governmental corruption.

The administration’s concept is simple: Countries with a demonstrated commitment to the rule of law and predictable and sound fiscal policy have the best chance of attracting private investors. The foreign aid grants would essentially amount to seed money, and Mr. Bush’s aides said today that it might be given to nongovernmental organizations in some countries, rather than just to the central government.

This is an absolutely brilliant idea. For too long the US government has been content to pour money into corrupt Third World governments that promptly misallocate the funds towards their own pockets. With this new program the rule is that such kleptocracies need to reform before they get their cash.

No doubt the left will through a wild fit over tying aid to such standards, but it is a necessary measure. Foreign aid does not improve a national economy – investment does. By using this US aid as a kind of seed capital for economic growth, the Bush Administration’s Millennium Challenge plan will do more to reduce poverty and increase government accountability by increasing foreign investment and economic liberty. This is a move that will have the anti-globalization/anti-American crowd in arms, but for advocates of free trade and citizens of developing nations, this could be a formula for success.

3 thoughts on “What Foreign Aid Should Be

  1. You think denying foreign aid money to ‘kleptocracies’ (I must remember that one!) will really change thier governments? Hardly. Granted I agree their governments shouldn’t be getting any, however instead of completely cutting thier people off it should be re-allocated to private/public charities working within that we know to be sound. If that fails re-allocate it to its safest neighbors willing to accept refugees.

  2. Funding corrupt regimes, whether through governmental funds or through private business, is morally wrong in my book- and the only way to truly help the poorer nations of the world is to BOTH establish just rule-of-law and find a way to get financial resources and education to the people who need it. It’s not so much a matter of one-or-the-other- this is a case where both the left and the right are partially correct.

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