US Foreign Aid Gets a New Look

THIRTY-TWO years ago President Kennedy created the Agency for International Development (AID) to fight "widespread poverty and chaos" in underdeveloped nations. Now President Clinton, who looks to his Democratic predecessor for inspiration, is retargeting the $6.9 billion-a-year foreign assistance program after the end of the cold war.

For decades, AID was used as a political weapon against Soviet allies and surrogates in Southeast Asia, Central America, Africa, and the Middle East. The third world still faces increasing poverty, disease, overpopulation, environmental destruction, and ethnic or religious conflict.

But while the need for foreign aid is growing, both the United States budget and Americans' sympathy for foreign aid is shrinking. Polls show Americans feel their money should address poverty at home.

Another problem is that AID funds often have wound up in the pockets of corrupt third-world rulers. In the early 1980s, for example, a $25 million AID project in Bangladesh to improve irrigation made the adjacent land increase in value so sharply that speculators and rich landowners bought it from the farmers, who ended up landless. Other AID loans to improve land were available only to the wealthy farmers who could meet credit criteria. But they wound up using the US cash to buy more land rather than im proving what they already had.

Seeking a new direction for foreign aid, the State Department in the Clinton administration has launched a major policy review of the AID program. That review "is basically ready," says a department spokeswoman. "Consultations are going on with the Hill and within the State Department and it could be ready next week."

She would not reveal any details of the review. But a congressional staff member who deals with foreign aid said that, under the retooled AID, "there will be less stress on the private sector and less support for specific businesses or government agencies," than under the Bush administration.

"More aid will be delivered through nongovernmental organizations and at the community level and the recipients will be more involved. There will be more support for democracy," the aide says.

The Clinton administration already has reversed some key Reagan and Bush development policies, approving aid for population planning and signing the Rio convention on biodiversity passed at the United Nations Conference on Environment and Development last year.

Although many existing Reagan and Bush programs that promote democracy and health are likely to remain unchanged, J. Brian Atwood, who was sworn in this week as AID's administrator, sketched out in his confirmation hearings a new direction for US foreign aid. Mr. Atwood said his four major goals will be:

* Promoting democracy, social justice, and human rights.

* Backing sustainable development that protects the environment.

* Preventing world population from exploding to 12 million or 13 billion people in the next 50 years.

* And responding rapidly to disasters such as the Somalia famine.

Atwood admits that AID is "encumbered by excessive red-tape and beaten down by poor morale" and that there is a clamor at home to "empower people in South Central Los Angeles as well as Somalia." But he makes the case that foreign aid is far from pure altruism. It's aimed, he says, at throwing the cooling water of cash, expertise, and medicine on problems, such as AIDS and Haitian boat people, that lap at America's shores.

For example, he says, AID would be unlikely to give money to fight goiter in Nepal, which is not viewed as a threat to the US, but would fight measles in Guatemala, which is considered a threat.

As he seeks to reshape AID, Atwood can rely on a stream of suggestions from think-tanks and academic experts who have been studying foreign aid closely.

Dr. Janet Brown of World Resources Institute in Washington, who prepared a policy paper on foreign aid for the Clinton transition team and testified last week before a House Foreign Affairs subcommittee, said that in the future AID should focus on empowering people so they participate in decisionmaking and teaching third-worlders how to get access to technical, legal, and credit information.

Jack Sullivan, a former AID Asia director, says that AID can take credit for helping stamp out smallpox, introducing oral rehydration for cholera, and establishing agricultural universities in India that have helped prevent famines since the 1960s.

"But now, they should reduce the focus of the program and concentrate on those issues that are clearly in the US interest and which we can affect through those programs," he says. "There's relatively few - environment, health, population. Especially things that come across our borders such as drugs; and situations of peacekeeping, where it's definitely in our interest to respond. Or assisting agricultural production on fragile lands.

One way AID would be more targeted, according to John Sewell of the Overseas Development Council in Washington, is "to help countries that help themselves." Mr. Sewell is the author of a 1992 white paper called "Reinventing Foreign Aid," which Atwood helped draw up before being appointed to run AID.

"I guess that environment, poverty, and democracy will be the major focus of AID reforms," Mr. Sewell says.

That, he says, is a major change from the mid-1980s, a time when "AID was driven by the political interests of the State Department."

He said that AID tried to force countries to adopt liberal economic policies and a market economy but "where our aid was big enough to get a seat at the [decision-making] table, such as in Egypt, we were not about to rock the boat and jeopardize the government in power. Everywhere else, our aid was too small."