How significant is US foreign aid?

“They take hundreds of millions of dollars and even billions of dollars, and then they vote against us. Well, we’re watching those votes. Let them vote against us. We’ll save a lot. We don’t care.”

That’s how the US president threatened to cut off financial aid to countries that voted against his decision on Jerusalem.

President Donald Trump violated international law and United Nations Security Council resolutions (which the US also agreed to) by recognising Jerusalem as Israel’s capital on December 6.

US Ambassador Nikki Haley, in a Twitter post echoed the US President saying that the ‘’US will be taking names.’’ 

Despite the threat, 128 countries voted against the US decision at the UN General Assembly on December 21. So what will happen now? Are those countries really going to suffer from US aid cuts?

The idea of cutting aid to these countries is a part of Trump’s America First Policy. 

Donald Trump announced his budget projection at the end of May and proposed an up to 28 percent cut. The budget for the State Department and US Agency for International Development (USAID) were already planning to cut down to $25.6 billion.

Recipients of US Foreign Aid

Even though more than 200 countries have received foreign aid, most of the aid goes to these five countries: Afghanistan, Israel, Iraq, Egypt and Jordan. These countries play a significant role in US’ national security goals in the Middle East.

Israel and Egypt are the largest recipients of US military aid. Egypt has been one of the major recipients after it agreed to an American-brokered peace deal with Israel in 1978. After the coup in 2013, the US increased military aid to Egypt on the grounds that it is an ally in fighting ISIS. 

The biggest aid recipient is Afghanistan, which the US invaded in 2001. 

After the US' partly withdrawal from Iraq in 2013, Washington has been supporting Iraq’s military with $20 billion in military aid, in addition to economic aid. 

Jordan’s strategic location surrounded by Israel, Saudi Arabia, Iran and Syria makes it a buffer state for the US in the Middle East. 

However, the expected budget cut will not affect each country the same way. Israel’s military aid will remain unaffected.

How important is US aid to the UN? 

The United States is also the top donor to United Nations. It donates $8 billion per year, of which $2.5 billion goes to peacekeeping initiatives.

The US mission to the UN said on Sunday that US aid to the UN will be cut by at least $285 million.

The five UN bodies that have received the most aid are the World Food Programme (WFP), UN Peacekeeping, the UN Refugee Agency (UNRA), UNICEF and the United Nations as a whole. As seen in Figure 2, most of the aid goes to UN agencies that deliver humanitarian aid, such as the WFP and the UNRA. 

As seen in Figure 3, prominent humanitarian agencies at the UN such as UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East) receive 30 percent of their aid from US. 

In October, US announced that it would withdraw from UNESCO after the agency recognised Palestine as a member state. The US had already started to cut its funding to the agency in 2011, which amounted to $550 million in arrears in 2017. 

Foreign Aid As a Geopolitical Tool

Foreign Aid has been a geopolitical tool used by the US to further its national security goals. Originating in 1961 with the creation of USAID during the Cold War era, foreign aid attempted to counterbalance Communist influence in Europe with the Marshall Plan. US foreign aid, which decreased with the collapse of the Soviet Union, increased again after the 9/11 attacks. Besides keeping the US safe, foreign aid serves other US interests, including fulfilling a moral imperative to support economically disadvantaged nations and driving global economic prosperity, of which success is questioned by some experts. 

Foreign aid mainly falls into two categories: economic and military, and it is given to governments, militaries, local charities and international organisations, including the UN. Foreign aid consists of money, goods (such as weapons) and services (such as training). 

In 2015, US foreign aid was $49 billion and accounted for 1.3 percent of the federal budget. 

Is USAID Effective?

According to a Brookings report, USAID has been successful by eliminating poverty and improving global health outcomes on a large scale. Some of the achievements include a 50 percent decline in malaria mortality since 2000, a fall in tuberculosis infections by 25 percent and the near elimination of polio worldwide.

While development experts, such as William Easterly and Angus Deaton acknowledge the success of USAID in global health, they criticise the aid for creating cultural and political dependencies. They say they believe that USAID perpetuates corrupt regimes.

Can China fill the gap caused by the US budget cut?

As it becomes clear that US budgets cuts will affect several of the UN’s humanitarian efforts, questions arise whether other economically powerful countries such as China can fill the gap left by the US. Earlier in the year, before President Trump’s inaguration, China’s President Xi Jinping, signalled his support for globalism in his speech at the World Economic Forum. 

China is already making billions of dollars infrastructure investments from South Africa to Sudan, as a part of the One Way One Road Initiative (OBOR). 

According to numbers presented by AidData, China is well positioned to replace the US in humanitarian aid. Over the period of 2000-2014, China’s foreign aid added up to $350 billion, almost catching up with the US, which is the world’s largest foreign aid provider which donated 394 billion dollars over this period.