Third World faces drastic cuts in U.S. aid


WASHINGTON -- At a time when the United States is vowing to shore up struggling democracies, particularly in Latin America, Congress has slashed economic aid to non-strategic nations by more than half.

In the new $14 billion foreign aid bill approved last week, Congress authorized an unprecedented package of $417 million for Russia and the former Soviet republics and earmarked more than $2 billion in continuing support for Israel and Egypt.

But in the name of deficit reduction, lawmakers shrank the pie of economic aid to the rest of the world -- from $845 million to $334 million.

The result: Fiscal 1993 will probably mark the most severe decline in U.S. foreign aid to Latin America, Africa and Southeast Asia in decades, administration officials said.

"It's very clear that there isn't enough money to do what we wanted to do," said David Liner, a legislative affairs officer at the U.S. Agency for International Development. "Somebody's going to get hurt, no question."

Some U.S. diplomats fret that without economic aid, they will lose an important political lever and source of good will around the world.

The cutbacks herald the start of a bitter struggle within the State Department as regional policy chiefs compete for the shrunken pool of economic support funds.

"The various regions will have to cannibalize each other and see who wins," a State Department aide said.

The economics counselor at the Guatemalan Embassy said: "This leaves us out in the cold. Now we realize that due to the U.S. budget crunch there's going to be less all around."

Guatemala received $30 million in economic support funds this year. For 1993, the administration requested $10 million.

Economic support funds represent the largest U.S. outlays abroad. The funds, which resemble cash grants, help countries service their debts and stabilize their economies. The Bush administration has one month to determine allocations to specific countries. Officials predicted that two neighbors emerging from wars, El Salvador and Nicaragua, would receive top priority. The administration had sought $160 million for El Salvador and $125 million for Nicaragua for fiscal 1993.

Other countries competing for the money include the Philippines, Afghanistan, Jordan, Tunisia and Mongolia.

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