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Impeachment Reminder of Our Toxic Foreign Aid

By James Bovard | Ron Paul Institute | Monday June 29, 2020

Foreign aid to Ukraine helped spur the Democrats’ effort to impeach and remove President Trump earlier this year. Ukraine was supposed to be on the verge of great progress until Trump pulled the rug out from under the heroic salvation effort by US government bureaucrats. Unfortunately, Congress has devoted a hundred times more attention to the timing of aid to Ukraine than to its effectiveness. And most of the media coverage pretended that US handouts abroad are as generous and uplifting as congressmen claim.

US foreign aid has long fueled the poxes it promised to eradicate — especially kleptocracy, or government by thieves. A 2002 American Economic Review analysis concluded that “increases in [foreign] aid are associated with contemporaneous increases in corruption” and that “corruption is positively correlated with aid received from the United States.” Windfalls of foreign aid can make politicians more rapacious, which economists have dubbed the “voracity effect.”

Early in his presidency, George W. Bush promised to reform foreign aid, declaring, “I think it makes no sense to give aid money to countries that are corrupt.” Regardless, the Bush administration continued delivering billions of dollars in handouts to many of the world’s most corrupt regimes.

Barack Obama proclaimed at the United Nations in 2010 that the US government was “leading a global effort to combat corruption.” The Los Angeles Times noted that Obama’s “aides said the United States in the past has often seemed to just throw money at problems,” while Secretary of State Hillary Clinton admitted that “a lot of these aid programs don’t work” and lamented their “heartbreaking” failures. But Obama promised during his 2008 campaign to double foreign-aid spending, which obliterated efforts to reform failed programs. In 2011, congressional Republicans sought to restrict foreign aid going to fraud-ridden foreign regimes. Secretary of State Clinton wailed that restricting handouts to nations that fail anti-corruption tests “has the potential to affect a staggering number of needy aid recipients.”

Regardless, the Obama administration continued pouring tens of billions of US tax dollars into sinkholes such as Afghanistan, which even its president, Ashraf Ghani, admitted in 2016 was “one of the most corrupt countries on earth.” The governor of Kandahar denounced his own government officials and police officers as “looters and kidnappers.” John Sopko, the Special Inspector General for Afghan Reconstruction (SIGAR), declared that “US policies and practices unintentionally aided and abetted corruption” in Afghanistan.

Since the end of the Soviet Union, the United States has provided more than $6 billion in aid to Ukraine. At the House impeachment hearings late last year, a key anti-Trump witness was acting US ambassador to Ukraine William B. Taylor Jr. The Washington Post hailed Taylor as someone who “spent much of the 1990s telling Ukrainian politicians that nothing was more critical to their long-term prosperity than rooting out corruption and bolstering the rule of law, in his role as the head of US development assistance for post-Soviet countries.” A New York Times editorial lauded Taylor and State Department Deputy Assistant Secretary George Kent as witnesses who “came across not as angry Democrats or Deep State conspirators, but as men who have devoted their lives to serving their country.”

Their testimony spurred Eric Rubin, president of the American Foreign Service Association, to bewail that “this is the most fraught time and the most difficult time for our members” since Sen. Joe McCarthy’s accusations of communism in the 1950s. A Washington Post headline echoed him: “The diplomatic corps has been wounded. The State Department needs to heal.” But not nearly as much as the foreigners supposedly rescued by US bureaucrats.

The Wall Street Journal reported on October 31 that the International Monetary Fund, which has provided more than $20 billion in loans to Ukraine, “remains skeptical after a history of broken promises [from the Ukrainian government]. Kiev hasn’t successfully completed any of a series of IMF bailout packages over the past two decades, with systemic corruption at the heart of much of that failure.” The IMF concluded that Ukraine continued to be vexed by “shortcomings in the legal framework, pervasive corruption, and large parts of the economy dominated by inefficient state-owned enterprises or by oligarchs.” That last item is damning for US benevolent pretensions. If a former Soviet republic cannot even terminate its government-owned boondoggles, then why was the US government bankrolling them? While many members of Congress could not find Ukraine on a map, far fewer could have offered any coherent explanation of what US aid bought in Ukraine.

Transparency International, which publishes an annual Corruption Perceptions Index, shows that corruption surged in Ukraine in the late 1990s (after the United States decided to rescue that country) and remains at abysmal levels. Ukraine now ranks in the bottom tier on the list of most corrupt nations, with a worse rating than Egypt and Pakistan, two other major US aid recipients notorious for corruption.

Actually, the best gauge of Ukrainian corruption is the near-total collapse of its citizens’ trust in government or in their own future. Since 1991, the nation has lost almost 20 percent of its population as citizens flee abroad like passengers leaping off a sinking ship. But as long as Kiev was not completely depopulated, US bureaucrats could continue claiming to be on the verge of achieving great things.

The House impeachment hearings and much of the media gushed over those career US government officials despite their strikeouts. It was akin to a congressional committee’s resurrecting Col. George Custer in 1877 and fawning as he offered personal insights in dealing with uprisings by Sioux Indians (while carefully avoiding awkward questions about the previous year at the Little Bighorn).

Foreign aid is virtue-signaling with other people’s money. As long the aid spawns press releases and photo opportunities for presidents and members of Congress and campaign donations from corporate and other beneficiaries, little else matters. Congress almost never conducts thorough investigations into the failure of aid programs despite their legendary pratfalls. As the Christian Science Monitor noted in 2010, AID “created an atmosphere of frantic urgency about the ‘burn rate’ — a measure of how quickly money is spent. Emphasis gets put on spending fast to make room for the next batch from Congress.” Martine van Bijlert of the nonprofit Afghanistan Analysts Network commented, “As long as you spend money and you can provide a paper trail, that’s a job well done. It’s a perverse system, and there seems to be no intention to change it.” The “burn rate” fixation produced endless absurdities, including collapsing school buildings, impassable roads, failed electrification projects, and phantom health clinics. SIGAR’s John Sopko “found a USAID lessons-learned report from 1980s on Afghan reconstruction but nobody at AID had read it.”

Perverse incentives

“Fail and repeat” was also AID’s motto in Iraq. After the 2003 invasion, AID and the Pentagon paired up to spend $60 billion to rebuild Iraq. As long as projects looked vaguely impressive at ribbon-cutting ceremonies, AID declared victory. Congressman Jason Chaffetz (R-Utah), listed some of the agency’s farcical Iraq success claims at a 2011 hearing: “262,482 individuals reportedly benefited from medical supplies that were purchased to treat only 100 victims of a specific attack; 22 individuals attended a five-day mental-health course, yet 1.5 million were reported as beneficiaries; … and 280,000 were reported as benefitting from $14,246 spent to rehabilitate a morgue.” Ali Ghalib Baban, Iraq’s minister of planning, denied in 2009 that US aid for relief and reconstruction had benefitted his country: “Maybe they spent it, but Iraq doesn’t feel it.” An analysis by the Center for Public Integrity noted that, according to top Iraqi officials, the biggest impact of US aid was “more corruption and widespread money-laundering.”

After driving around the world, investment guru Jim Rogers declared, “Most foreign aid winds up with outside consultants, the local military, corrupt bureaucrats, the new NGO [nongovernmental organizations] administrators, and Mercedes dealers.” Mercedes-Benz automobiles became so popular among African government officials that a new Swahili word was coined: wabenzi — “men of the Mercedes-Benz.” After the Obama administration promised massive aid to Ukraine in 2014, Hunter Biden, the vice president’s son, jumped on the gravy train — as did legions of well-connected Washingtonians and other hustlers around the nation. Similar largesse ensures that there will never be a shortage of overpaid people and hired think tanks ready to write op-eds or letters to the editor of the Washington Post whooping up the moral greatness of foreign aid or some such hokum.

Bribing foreign politicians to encourage honest government makes as much sense as distributing free condoms to encourage abstinence. Rather than encouraging good governance practices, foreign aid is more likely to produce kleptocracies. As a Brookings Institution analysis observed, “The history of US assistance is littered with tales of corrupt foreign officials using aid to line their own pockets, support military buildups, and pursue vanity projects.” Both US politicians and US bureaucrats are prone to want to continue the aid gravy train regardless of how foreign regimes waste the money or use it to repress their own citizens.

US government leaders are far more concerned with buying influence than with safeguarding purity. Foreign aid is often little more than a bribe for a foreign regime to behave in ways that please the US government. One large bribe naturally spawns hundreds or thousands of smaller bribes, and thereby corrupts an entire country. The impeachment of Trump was driven by the specific favor that Democrats claimed he had requested from the Ukrainian president, not from seeking favors per se.

When it comes to the failure of US aid to Ukraine, almost all of Trump’s congressional critics are like the “dog that didn’t bark” in the Sherlock Holmes story. The real outrage is that Trump and prior presidents, with Congress cheering all the way, delivered so many US tax dollars to Kiev that any reasonable person knew would be wasted.

Foreign aid will continue to be toxic as long as politicians continue to be politicians. There is no bureaucratic cure for the perverse incentives created by flooding foreign nations with US tax dollars. If Washington truly wants to curtail foreign corruption, ending US government handouts aid is the best first step. Counting on foreign aid to reduce corruption is like expecting whiskey to cure alcoholism.

June 29, 2020 - Posted by | Corruption, Economics, Timeless or most popular | , ,

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