Foreign aid: a scramble for funds

US foreign aid, one tool of US diplomacy with few Capitol Hill supporters before an election, has had its budget on a shelf for more than a year. Ironically, the penny-pinching discipline that former Sen. Edmund S. Muskie and other lawmakers tried to bring to Congress in recent years has put a squeeze on Mr. Muskie in his new role as US secretary of state.

In the last few months, American foreign aid has undergone an emergency pruning, such as cutbacks in support for new roads for Mauritanian farmers, a Niger reading project, and post-hurricane reconstruction of Dominican Republic agriculture.

President Carter's request of $8.6 billion for foreign aid in fiscal year 1981, which began Oct. 1, awaits action in mid- November by a "lame-duck" Congress that did not even pass a 1980 foreign aid package.

In effect, US foreign aid -- which operates in economies with an average inflation rate of 30 percent -- has been kept at essentially 1979 budget levels. Programs -- ranging from the Peace Corps to military arms loans -- have been reduced 20 percent or more, forcing a bureaucratic scramble in many agencies to divvy up ever-shrinking funds.

"It is just not good for the US to give an appearance of paralysis on foreign aid. Countries laugh at us for not making good on agreements that are obviously in our own good. The loss of credibility will hurt the US in the long run," says Douglas J. Bennett Jr., administrator for the US Agency for International Development (AID).

In July, Secretary Muskie warned his former colleagues that the budget impass on foreign aid "cuts back our arsenal of influence" around the world. When he was Senate Budget Committee chairman before taking over the State Department in May, Mr. Muskie was the leading advocate in Congress for a new book-balancing arrangement that placed foreign aid bills as one of the last considerations each year.

For more than a year, the House and Senate have either failed to take up or not agreed on a foreign aid package, forcing passage of a "continuing resolution" which keeps funding at close to present levels.

In addition, the bill was delayed by last spring's on-again-off-again budget balancing, an unusually crowded congressional calendar, traditional lawmaker reluctance to vote on controversial measures in an election year, and, according to congressional aides, a "vacuum of leadership" for support of US largest to developing nations.

"Foreign aid is one regular issue that the House gets to express its views itself on foreign policy -- there aren't too many Panama Canal treaties. There is no question of the votes on Capitol Hill. But we're dealing with an institutional blockage in which foreign aid comes up last," Mr. Bennett says. "If they plan to cut us back, fine. We can do with less, but we can't cope with the uncertainty."

The budget cuts entangle AID's five- year development plans in 60 countries. These plans began in 1977 under the Carter administration, which had scheduled a doubling of AID funding by 1983. "It makes a mockery of our planning process. And we are upsetting other governments' planning," says Alexander Shakow, AID policy director.

If Ronald Reagan is elected President on Nov. 4 in a conservative turn at the polls, US foreign aid could face even more uncertainty, AID officials say.

But defenders of foreign aid express hope that a Reagan administration would view US money for developing nations as necessary for favorable conditions to American interests.

Critics point to foreign aid failures in gaining US political influence, such as Afghanistan. But foreign aid may be gaining new allies in Congress, Mr. Bennett points out: "US companies know that tomorrow's sales are in developing nations. The third world is impinging on the people's consciousness."