Foreign Relations of the United States, 1977–1980, Volume I, Foundations of Foreign Policy

77. Address by Secretary of State Vance¹

Cincinnati, Ohio, May 1, 1978

Foreign Assistance and U.S. Policy

Today I want to discuss with you a subject about which I care deeply because of its importance to our nation. I speak of foreign assistance.

Over the years the League of Women Voters has endeavored to explain and support our foreign assistance programs. You have done this as an essential part of your nonpartisan program of public education. Your interest in and knowledge of foreign assistance has been a key element in making people aware of what their government is trying to achieve with these programs.

The United States has a profound stake in its relationships with the nations and peoples in developing countries. Our response to their problems, needs, and aspirations tests not only the quality of our leadership in the world but our commitment to economic and social justice.

Let me begin our discussion by posing three questions. First, why do we have foreign aid programs? Second, what are these programs designed to accomplish? Third, do they work?

During the past 15 months as the Carter Administration fashioned aid budgets, reorganized aid programs, and discussed aid issues with Congress, we have thought with great care about these three questions. Today, in discussing our conclusions, I want to return to the basic elements of our aid programs.

Why Foreign Aid

Our foreign policy flows from what we are as a people—our history, our culture, our values, and our beliefs. One reason this nation has a foreign aid program is that we believe we have a humanitarian and moral obligation to help alleviate poverty and promote more equitable economic growth in the developing world.

We cannot be indifferent when half a billion people are hungry and malnourished, when 700 million adults are illiterate, and when one and a half billion people do not have minimal health care. As free people who have achieved one of the highest standards of living in the world, we cannot fail to respond to such staggering statistics and the individual lives they encompass. We can be proud that we are a people who believe in the development of human potential.

The answer to the question of why we have foreign aid programs also goes beyond our system of values and our concern for the less fortunate. Foreign aid is clearly in our national economic and political interest.

The success or failure of developing countries to grow more food, develop new energy supplies, sell their raw materials and products, curb their birthrates, and defend themselves against aggression will matter to Americans.

Our economic health and our security are more closely tied today than ever before to the economic well-being and security of the developing world. Progress there means more jobs and more prosperity for the United States.

• The non-oil-producing developing countries are a major market for American goods, taking a quarter of our total exports last year. About the same share of our total exports goes to Europe and the Communist countries combined.

• Products from less developed countries—including raw materials such as tin, copper, bauxite, and lead—accounted for nearly a quarter of our total imports last year.

• Our nation gained more than $7 billion from our direct private investment in the developing world in 1975. And in 1976 developing countries absorbed nearly $11 billion of our direct foreign investment.

• In the export of our agricultural abundance last year, developing countries purchased half of our exports of cotton, 65% of our wheat, and nearly 70% of our rice.

• Our economy benefits substantially as aid dollars are spent here to buy commodities and services. For example, for every dollar we have paid into such organizations as the World Bank and the regional development banks for Latin America, Asia, and Africa, about $2 has been spent in the U.S. economy.

The economic growth of the developing world is taking place primarily as a result of massive efforts by the leaders and peoples of the developing nations. For many, the most critical international factors in their growth and development are our policies toward trade, investment, commodities, and technology. Our economic aid, as well as that provided by other developed nations, also makes a crucial contribution to their well-being. For some countries—particularly the low-income nations—it is the principal source of foreign exchange and technical assistance. But for many others, it serves as an essential complement to other components of their development strategy.

In addition to America’s economic involvement in the developing world, our political interests are strongly engaged as well. Developing countries are often key participants in the quest for peace. Regional stability and peace in the Middle East, southern Africa, and elsewhere cannot be achieved without the cooperation of developing nations. Achieving progress on the global issues which directly affect peace—arms restraint and nonproliferation—depends in large measure on strengthening political ties between the industrialized and developing worlds.

Our ties to developing countries are essential in many other areas which affect our national security: in deploying our armed forces and in maintaining access to straits, ports, and aviation facilities.

But the peace and stability we seek in the world cannot be obtained solely through the maintenance of a strong defense in concert with others. The social unrest which breeds conflict can best be prevented if economic growth and an equitable distribution of resources are realized. As Pope John XXIII so eloquently stated: “In a world of constant want there is no peace. . . .”

Foreign Assistance Programs

In view of the stakes involved, our foreign aid goals must be matched by our performance. The Carter Administration is asking the Congress to authorize and appropriate $8.4 billion for our economic, food, security assistance programs, and contributions to the international financial institutions this fiscal year. About 16% of this sum represents government guarantees and will not result in actual spending. We are requesting these sums because we believe that foreign aid can and does work. We believe it can have a direct impact on economic growth and the maintenance of peace.

Let me give you a summary of what we are trying to do.

First, in the area of bilateral economic assistance, we are trying to determine the most effective way to channel this aid to stimulate economic growth and alleviate poverty. In doing so we are implementing a strategy which targets our resources directly on the needs of the poor. Called the “basic human needs” approach, this development strategy seeks to help people meet such basic needs as nutrition, shelter, education, and health care. It is not an international welfare program. It is, instead, an approach to development which gives the poor a chance to improve their standard of living by their own efforts.

• Farmers need good quality seed if they are going to escape subsistence agriculture and grow enough food for their families and to sell at the market as well. Our aid program in Tanzania, for instance, is helping that government establish a seed multiplication project to provide improved seed for the main crops grown there. The impact on the lives of Tanzanian farmers should be large.

• In vast sections of West Africa, people cannot live in potentially fertile agricultural areas because of a terrible disease—river blindness. We are helping to finance efforts to suppress this affliction. Some success has been achieved. Small farmers are already beginning to resettle in areas which had been virtually abandoned.

• Education is critical to human development. In numerous poor countries, our aid goes to training people in rural and urban areas in basic skills which permit them to earn a better living. Education takes place in many ways besides the schoolroom. It can be carried by low powered local radio programs, such as one we fund in Guatemala, or by direct broadcast satellite TV, as in an experiment we assisted in India.

Second, the programs of the World Bank and the regional development banks through which we channel a significant amount of our foreign aid range from large, capital intensive programs, such as dams and roads, to smaller scale programs designed to directly improve the lives of the poor. These institutions can mobilize and coordinate large amounts of capital for development. And they can build consensus between aid donors and recipients on development goals. In performing these roles, they well serve U.S. interests. The work of these institutions is varied.

• In Buenaventura, Colombia—one of the poorest cities in the hemisphere—the Inter-American Development Bank is trying to relocate slum dwellers and provide the city with safe drinking water to reduce disease.

• In the West African country of Benin, the African Development Fund is improving rural health services by constructing dispensaries in remote areas and training people to run them.

• In Burma, an Asian Development Bank loan will increase fish production for domestic consumption, thus raising the low protein intake of the population.

Third, we support the development programs of the United Nations, which finance technical assistance to poor countries and provide direct humanitarian assistance to children, refugees, and other groups in need of particular relief.

• In India, the U.N. Children’s Fund is working to restore and improve potable water resources in the areas hardest hit by the November 1977 cyclone and tidal wave.

• In Central America, experts from the U.N. Development Program are working in four countries to develop energy from underground volcanic steam.

I could go on and on, citing projects in various countries aimed at specific problems and particular groups. The point is that when we are discussing aid levels, we must remember we are not talking about abstract statistics: we are talking about whether or not we can fund practical projects that make a difference to people in need.

There is another important aspect of our foreign aid program which I would like to mention very briefly—our security assistance programs.

These programs have three important objectives. First, they are designed to assist our friends and allies to provide for their legitimate defense needs. Second, these programs support our strategic and political objectives of reducing tensions and promoting stability in areas of potential confrontation and conflict. Third, they provide economic assistance to countries which are experiencing political and economic stresses and where U.S. security interests are involved. The vast majority of our security assistance aid goes to support our peace efforts in the Middle East and in southern Africa. In providing assistance to such nations, we help them meet the economic strains imposed by tensions in their regions.

Does Foreign Aid Work?

Do all these programs work?

There is a popular myth that foreign assistance often does not produce results. The record shows otherwise.

It is impossible to separate foreign assistance from other factors that produce development. But foreign assistance has been central in some measure to the following achievements.

• Between 1950 and 1975 the developing countries grew more rapidly than either they or the developed countries had grown in any time period in the past.

• Substantial increases in life expectancy are taking place in many developing countries.

• The number of children in primary schools in the developing world has trebled since 1950, and the number of secondary students has increased sixfold during the same period.

• The battle against communicable disease has produced significant results. Smallpox is now confined to a small area of Africa, and the numbers of people suffering from Malaria has been reduced by 80–90% in the past three decades.

• The yields of rice and wheat in Asia are estimated to be substantially higher today because of the introduction of high-yielding varieties. More than a billion dollars worth of grain each year is ascribed to the new seed.

Beyond these successes, the record reveals countless instances in which projects funded by foreign assistance have improved the lives of people in fundamental ways.

• When a village has clean water, its children are no longer made sick from the water they drink.

• When couples have access to family planning services, there are fewer mouths to feed.

• When a clinic is constructed, modern medicine enters lives for the first time.

• And when a job program begins, the unemployed can find work and have incomes.

Progress has been made. But more has to be done. Over the last 15 months the Carter Administration has made a substantial effort to further improve the management and effectiveness of all of our programs.

Let me report to you on some of the steps we have already taken or will soon implement to achieve this objective.

One of the key problems with foreign assistance over the years has been a lack of adequate coordination between our bilateral programs and our activities in the international financial institutions. Responsibility for these various programs is spread throughout several Cabinet Departments and agencies.

Shortly before his death, Senator Hubert Humphrey introduced legislation which called for a sweeping reorganization of the government’s foreign aid programs designed to meet these defects in coordination, The Carter Administration announced its support of the basic purposes of this bill. Although the Congress will probably not consider this legislation in the current session, the Administration is moving to put into place a new interagency coordinating mechanism which we believe will go a long way toward having the executive branch better coordinate its diverse development efforts.²

The Agency for International Development has been reorganized under the leadership of Governor John Gilligan. More authority is being delegated to our AID missions abroad. Tighter controls are now imposed on financial and operational procedures. In addition, AID has eliminated some complex and cumbersome procedures which have slowed our ability to design and implement projects.

The United States has encouraged the multilateral banks to better take into account the lessons of the past—both successes and failures. The Administration has also shared congressional concerns about high salary levels of bank employees. We want the banks to look especially hard at more effective ways to reach poor people directly, as well as to operate in the most cost effective ways.

In our security programs we have tightened management controls and have instituted an interagency committee to provide coordinated recommendations to me and the President on all aspects of our arms transfer and security assistance programs.³

Finally, because we recognize that science and technology offer many opportunities for expanding the development process, President Carter has proposed the creation of a new U.S. foundation on technological collaboration.⁴ This foundation will support the application of our research to development problems. And it will improve the access of the developing countries to American science and technology.

We will continue to seek ways to improve the management and delivery of our foreign assistance programs. Accountability to the Congress and to the public is an essential element of our approach.

Other Key Issues

There are several other important questions relating to our foreign assistance programs which I would like to discuss.

First, there is a growing belief that we are both giving more aid and at the same time losing control over where it goes. Let me put this issue in perspective.

Clearly, we are not shouldering a disproportionate burden of global aid flows. While in absolute terms the U.S. aid program is larger than that of any other nation, as a percentage of GNP we rank in the bottom 25% of all non-Communist country donors.

Concerning control, we are very active in attempting to steer multilateral assistance in directions we think best for our nation and for global development. We have often been successful in encouraging the types of projects consistent with our desired policies. We will be working closely with Congress to develop procedures which permit the United States to express its views about multilateral lending policies as effectively as possible. But in doing so, we must recognize the damage that would be done if the international character of these institutions were lost.

Second, our foreign assistance programs must be consistent with our determination to improve the conditions of political, economic, and civil rights worldwide. Over the past year we have reviewed all of our aid programs for their impact on human rights. In some cases we have reduced assistance to governments with consistent records of repression. We have also increased aid to others with good or improving human rights policies.

We face a dilemma when applying human rights considerations to foreign assistance. We do not want to support governments which consistently violate human rights. On the other hand, we do not wish to deny our assistance to poor people who happen to live under repressive regimes. We must resolve this dilemma on a case-by-case basis. In general, we have approved aid programs when they would directly benefit the poor since we recognize that people have economic as well as political rights.

Third, there is the question of which countries should receive our aid. The President has decided that our concessional assistance programs should focus primarily but not exclusively on the poorest countries. In the more advanced developing countries we do not want to substitute our own support for the assistance those governments should be giving. On the other hand, we cannot be indifferent to the plight of people who are no less poor because they live in middle income countries and who need our help. We are resolving this problem by insisting that our efforts to mount programs in middle income developing nations be matched by efforts of the host country.

Fourth, it is sometimes argued that we cannot afford to spend large amounts of money to help solve problems abroad when we have many pressing domestic needs. But I firmly believe that it would be a serious mistake to try to trade off international obligations for domestic priorities. Both need to be addressed.

The health of our nation is increasingly dependent on the world economy. If we neglect international progress, we undermine the welfare of our own society. As a nation we have a major concern with improving the lives of poor people. I do not believe this is a credible commitment if made only domestically. And as a percentage of the Federal budget for 1979, our economic assistance is only 1.47%. Adding our security assistance programs does not increase this figure substantially.

We can afford to increase foreign aid expenditures at a reasonable rate, as we must. At the same time, we can afford to increase our domestic education budget, expand programs for the elderly, and fund other critical domestic programs as we are now doing. Helping the children of Pakistan have adequate diets does not mean that we need neglect the children of Cincinnati, Boston, or Los Angeles. Helping the farmers of Mali grow more food does not mean we need to abandon the farmers of Texas, Illinois, or Colorado. And helping the nations of the Middle East remain at peace does not mean that we cannot help meet the needs of our cities. We do not have a choice. Both foreign aid and adequate domestic expenditures are essential to the national interest.

Senator Humphrey raised a fundamental issue about foreign aid. He said: “The question we must decide is whether or not the conditions of social and economic injustice—poverty, illiteracy, and disease—are a real threat to our security. I think they are and they require the same commitment of policy, will, and resources as does our conventional national defense.”

As someone charged with helping to protect the national security, I agree with Senator Humphrey’s assessment of the role of foreign aid in the scheme of our national priorities. I agree with his approach to the tasks of alleviating poverty and working for peace.

He believed in harnessing the energy and creativity of the American people to solve problems which have plagued the world for centuries. I share his faith in our abilities. I share his optimism that we can do the job.

I ask that you help us inform the American people why foreign aid is essential to the nation’s economic health, political interests, and preservation of its humanitarian tradition.

1. Source: Department of State Bulletin, June 1978, pp. 14–17. Vance delivered his address before the national convention of the League of Women Voters. The text of the question-and-answer session following his address is ibid., pp. 17–19.
2. Humphrey’s International Development Cooperation bill proposed the establishment of a single foreign aid agency charged with administering bilateral and multilateral aid programs. Following Humphrey’s death on January 13, Case and Sparkman introduced the bill in Congress. Although Humphrey’s bill was not enacted into law, the President subsequently issued Executive Order 12163 on September 29, 1979, establishing the International Development Cooperation Agency (IDCA). The IDCA began operations on October 1, 1979. See Graham Hovey, “A Humphrey Legacy: Bill to Streamline Foreign Aid,” The New York Times, January 26, 1978, p. A–3; Congress and the Nation, vol. V, 1977–1980, pp. 74–75; and Public Papers: Carter, 1979, Book II, pp. 1792–1800.
3. Presumable reference to the Arms Export Control Board.
4. Presumable reference to the proposed Foundation for International Technological Cooperation (FITC).