The War in Ukraine Shows the Need for Foreign Aid Reform

As the Western world has poured military and humanitarian aid into Ukraine, the issue of what might become of other aid-dependent countries has been glossed over. The focus on Ukraine is understandable, but policymakers must be able to address multiple problems at the same time. Focusing solely on Ukraine risks undermining the U.S. standing in the rest of the world and leaves developing countries ripe for China’s taking. 

First, foreign aid needs to be increased. Several polls have shown that Americans on average believe the U.S. is spending 28 percent of its federal budget on foreign aid, and also that other countries are not doing their fair share. In fact, the U.S. spends less than 1 percent of its federal revenues on foreign aid, and it is not even among the top 20 donors in the world as a percentage of GNI. 

This was not always so, and no one denies the importance that U.S. foreign aid has had historically, particularly with the Marshall Plan after World War II. Today, though, the U.S. foreign aid budget is only 0.18 percent of GNI, far below countries like the United Kingdom (0.7 percent), France (0.43 percent) and Germany (0.67 percent).

One statistic is not the whole story. On an individual level, Americans are far more charitable than Europeans. But foreign aid is a source of soft power in a sense that private charities can never be, and insufficient funding for foreign aid projects inevitably decreases the amount of soft power America has. It should be noted that, after decades of decline, U.S. foreign aid began to increase as the war on terror made it necessary for America to rebuild the countries (Iraq and Afghanistan) that it had liberated. Still, spending is less than a third of what it was in 1962 as a percentage of GNI. Back then, the U.S. recognized foreign aid as an effective way to fight the advance of communism across the globe, one that would not risk escalation and war with the Soviet Union.