Capitalism with a human face

The Kissinger Commission on US-Central American relations is searching for a way to bring long-term stability to Central America. President Reagan has indicated that he sees economic aid as the best way to achieve this end. The President and commission members need only look to the Inter-American Foundation (IAF) as a blueprint for development.

The IAF is the jewel of US development programs. It gives capitalism a human face. The IAF achieves this by encouraging the common people of a nation to help themselves.

The Inter-American Foundation is a public corporation founded in 1969. In 1982, it had a budget of about $26 million, compared with the Agency for International Development's budget of $4.6 billion.

The foundation's money comes from congressional appropriations and the Social Progress Trust Fund of the Inter-American Development Bank. It is governed by a board of directors which is appointed by the President. Four board members are from the private sector and three from US government agencies. The semiprivate autonomous structure of the foundation and the composition of its board of directors has enabled it to remain free from partisan politics, contributing greatly to its credibility.

The IAF works strictly with grass-roots organizations in Latin America and the Caribbean. Projects are developed and designed by indigenous groups or organizations, which then apply for IAF grants. The foundation therefore can only respond to requests by local groups. This is an economically sound approach to development, because the people of a region truly understand the most pressing problems facing them. It is psychologically rewarding for them, because each project is the result of the efforts of the individuals involved, not the United States government. This, in turn, fosters goodwill for the US.

Grants made by the foundation are relatively small, ranging from less than $5 ,000 to over $200,000, thereby reaching the people of a nation more directly. Other US aid programs often fall short of that mark. Funds become bogged down in the governmental red tape of a nation or its internal politics. What is perhaps most remarkable about the IAF is that every dollar it invests is usually more than matched by local groups.

Examples of the kind of projects supported by IAF grants are a Red Cross Association in Belize, which received money to provide training and supplies for health care and nutrition programs conducted by community organizations; a school in Uruguay to help poor children learn to read and write; and loans to small businesses in Dominica and the Bahamas.

The guidelines of the foundation should become the guidelines for all US development programs. The legislative mandate of the IAF states that it provide opportunities for disadvantaged groups in the region, encourage community organizations and grass-roots groups to participate in development decisions, and encourage the growth of democratic institutions.

It is ironic that we continue to search for ways to help Latin American and Caribbean nations develop through such heralded programs as the Caribbean Basin Initiative when what really needs to be done is to design our aid projects in the same manner developed by the IAF.

Of course, like all government-sponsored organizations, the foundation has been carefully scrutinized. But a critical Heritage Foundation report, a GAO study, and a recent congressional hearing on the IAF have in no way tainted its reputation.

If the IAF were to shift its policies and procedures with changes in the White House, it would cease being a credible organization. Just as the Kissinger Commission's credibility in the US depends on its nonpartisan stance, so does international aid require a nonpartisan, nonpolitical approach to be effective.

While it is not reasonable to expect all US aid programs to be apolitical, the less political they are, the more chance there is for bipartisan support and ultimate success.

Millions of tax dollars have been spent in Central America over the past few years, thousands of people have died, and yet poverty, which is the primary cause of the region's problems, is still rampant. The IAF may not have all the answers, but it can be used as an example of what the US should do in the region.