Long-Term Development

Foreign aid, contrary to current American policy, is not a series of emergency measures that can be halted tomorrow or the day after, should the Russians discontinue their "economic warfare," but is a systematic response to a deficiency in the world's economy. Senator Kennedy, in his plea for a "revitalized" Development Loan Fund administered by the State Department with enough capital for long-term operation, although a constructive suggestion, does not go far enough.

For the trouble with American programs, in addition to their sporadic, crisis-to-crisis nature, is in the source itself. Newly independent nations, jealous of their hard-won freedom, are naturally reluctant to accept help from one of the major Cold War powers. Either they accept amid misgivings and internal tensions or they cynically play off one offer against another.

The tendency for economic assistance to become a battleground of the superpowers leads to emphasis of the spectacular over the useful--paving the streets of Kabul is better and more immediate propaganda, if poorer economics, than building a dam. Faced with a declaration of "war" in the economic field, the United States may either punish those who treat with the enemy or match the enemy's offers. But neither course is really practicable, for one smacks of "strings attached" aid and the other prevents any systematic long-range planning.

The only sensible alternative is to reject the Soviets' "economic war," and to remove the assistance to underdeveloped countries from the realm of Cold War competition. Economic development in the "uncommitteed areas" is in itself a reasonable goal for American policy.

Experience has shown that the most successful aid programs--like the International Bank for Reconstruction and Development and the Colombo Plan--have been administered by international organizations encompassing both donor and recipient. For this reason, some statesmen have wisely proposed that the bulk of American foreign aid contributions be turned over to an International Development Authority.

IDA, unlike the IBRD, would operate on a local currency basis--a loan to India, for example, might consist of francs for French concrete, guilders for Dutch engineers, and rupees for the local labor. India would repay, at low interest over a long period, in rupees, which in turn would later be used by the Authority to purchase Indian goods and services, thus providing a double boost to India's economy.

The foreign aid program in the uncommitted areas, after more than a decade of operation, can be considered a failure, in terms both of economic development and of propaganda. The time has come to try a new, more logical approach.