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How the deficit hurts foreign policy

By Joseph S. Nye

By Joseph S. Nye

Last week, I published a piece in Foreign Policy entitled “The War On Soft Power.” I argued that many official instruments of soft or attractive power — public diplomacy, broadcasting, exchange programs, development assistance, disaster relief, military-to-military contacts — are scattered around the government, and there is no overarching strategy or budget that even tries to integrate them. But cutting them all to zero would make no difference to the resolution of our trillion dollar deficit problem. By cutting $8.5 billion from the State Department budget, Congress did nothing about the deficit, but took a large slice out of our foreign policy capacity. I concluded that “Congress needs to be serious about deficit reduction, and it also needs to be serious about foreign policy. The events of the past week suggest it is serious about neither.”

 copy of the fiscal 2012 federal budget and it's appendix are seen at the U.S. Government Printing Office (GPO) in Washington, Thursday, Feb. 10, 2011. (AP Photo)

copy of the fiscal 2012 federal budget and it's appendix are seen at the U.S. Government Printing Office (GPO) in Washington, Thursday, Feb. 10, 2011. (AP Photo)

Now my friend Ken Adelman has responded “go ahead, Congress, cut away at U.S. foreign aid.” He argues that the relationship between the amount of aid a country receives from us and our influence remains unclear at best. Aid does not buy love. The four largest recipients — “Egypt, Israel, Pakistan, and Afghanistan — all take contrary positions on issues of critical importance to the White House.” Aside from the fact that soft power rests on many foreign policy instruments, Adelman makes a valid point about aid. Much of our aid to the countries mentioned is part of hard power bargaining, not the soft power of attraction. Whether it is a good foreign policy investment needs to be assessed on a case by case basis.

When one looks at American assistance programs, less than half is administered by AID and devoted to development. As a superpower, the U.S. has many objectives for assistance that are not directly related to development. A quarter of American aid is administered by the Pentagon. Even when aid is designated for development only, it can still be used to create hard economic power, for example, by building up the economic and administrative capabilities of an allied country.  “State–building” can develop the hard power of an ally.  The Marshall Plan in which the US contributed two per cent of its GDP to restore the economies of Europe that had been devastated by World War II is an important case in point. By restoring growth and prosperity to Western Europe, the US succeeded in strengthening resistance to communism and the Soviet Union – a major foreign policy goal. The Marshall Plan also helped to develop a sense of gratitude in Europe and enhanced American soft power among the recipient countries. Occasionally, people have called for similar Marshall Plans for development in many less developed regions, but one of the problems with such proposals is not just the scale of the original plan, but the fact that European economies were already developed and needed to be restored. Moreover, they administered much of the aid effectively.

Today, economists do not agree that there is a clear formula for development, or if there is, that aid is always productive. Indeed, some go so far as to argue that aid can be counterproductive by creating a culture of dependency and corruption. This does not mean that aid is always ineffective but that we should be cautious about overly optimistic estimates.  Sometimes small scale and carefully focused projects have better pay-offs that are not measured by the dollars spent.  To this extent, Adelman’s caveats are correct, but the fact remains that aligning American foreign policy with the development goals of the majority of the people on the planet, and financing carefully structured humanitairan, health and development assistance programs can be a useful component of American soft power. And contrary to public opinion, all aid comprises less than 1 percent of the federal budget. Mindless cuts do not solve our deficit problem and they can hurt our foreign policy.

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