by Emad Mekay
(IPS) WASHINGTON --
Bush administration's loudly trumpeted recent announcements of development aid hikes coupled with more money to fight HIV/AIDS globally do not match budgetary realities and may translate into far smaller increases than anticipated, say two economic think tanks.
In a report released on May 20, the Center for Global Development (CGD) and the Center on Budget and Policy Priorities, both based in Washington, say the promised aid increases will be far more modest than announced and that U.S. aid remains well below historical standards and far below that of other major countries.
"The administration was quick to make large announcements and has been much slower in following through and ensuring that those announcements translate into actual new spending on the ground," said Brian Deese, program associate at the CGD.
"I think this is more of a reality check ... Given adequate pressure and considerable bi-partisan support in Congress, we could still see positive development," he added.
On Wednesday, Bush said he was looking forward to signing a bill next week, passed by Congress on Wednesday, to give $15 billion -- including $10 billion in newly-pledged money -- over five years to fight HIV/AIDS in Africa and the Caribbean.
He called the plan "the largest, single up-front commitment in history for an international public health initiative involving a specific disease."
The AIDS money comes on top of the president's announcement in March 2002 of the largest increase in development aid since the Kennedy administration (1961-63), through a proposed hike of $10 billion for the Millennium Challenge Account (MCA).
The promised increases were hailed as steps to fundamentally transform U.S. development policy and maximize its impact in the developing world, and received positive reviews from aid agencies, development groups and some civil society organizations.
Yet, the new report reveals that although the administration's original proposal for the MCA called for a whopping $10 billion over three years, to reach and sustain annual funding of $5 billion a year starting in 2006, Bush's actual request for the MCA in the 2004-2006 budget is only $4 billion.
"The administration's budget proposes funding the Millennium Challenge Account at levels far less than it has announced," says the report, whose authors say they used data from Office of Management and Budget, the Congressional Budget Office, and the U.S. Agency for International Development (USAID).
"This is only 40 percent of the administration's initial public commitment," it adds. On top of that, some of the $4 billion dollars would be spent after 2006.
To further undermine the administration's MCA forecast, the report quotes figures from the Congressional Budget Office (CBO), a usually optimistic body, that estimates that actual MCA spending from 2004 through 2006 will be $1.7 billion dollars, or 17 percent of the president's initial public commitment.
When the budget was released in early February, some administration officials suggested that the request was an error, and that the figures for 2005 and 2006 would be corrected to reflect the increase to $5 billion dollars a year.
But the 11-page report notes that till now, "the numbers have not been corrected."
"If the administration does clarify this issue, it will need to reduce resources proposed for other areas in the budget or build in a higher expected deficit," the report adds.
The disparity between rhetoric and reality also extends to promised funds to battle AIDS. In his State of the Union speech Bush pledged $10 billion in new spending over the next five years, but the report says the president originally requested only $450 million for his new HIV/AIDS initiative for 2004.
The request, says the report, left unclear how that figure would be raised over the coming five years to reach the much-touted $10 billion.
Again here, the CBO dampens the forecast, estimating that only $45 million of the originally proposed $450 million is likely to be spent on AIDS in 2004.
With the fine print in place, U.S. aid spending totals a mere 0.12 percent of the economy, or about 12 cents of every 100 dollars, well below the amount devoted to aid from the end of World War II through 1996.
Measuring aid as a share of the economy is the standard approach used in international comparisons.
The report says that after adjusting for inflation, the president's budget, plus a recent wartime supplemental request of $2.5 billion to help reconstruct Iraq, would together result in an increase in development aid spending from 2003 to 2004 of five percent in real terms, continuing a string of recent increases.
"But because this spending has been so low in recent years, and fell so much in the 1990s, the proposed level would still be meager by historical standards, particularly when viewed as a share of the economy and as a share of all government spending," it adds.
Still, the proposed increases merely reflect expected economic growth, it points out.
Under the budget, development aid spending as a share of the economy would equal an estimated 0.123 percent in 2008, virtually the same as the 0.124 percent level forecast in 2004.
That means that for the next several years, aid as a share of the economy is likely to be lower than it ever was in the 50 years of 1946-1996, and well below one-half the level of Overseas Development Assistance (ODA) now provided by the typical donor country, estimated at around 0.30 percent.
"The United States would still be at the bottom of the barrel among all donors in its spending on development aid excluding military aid as a share of the economy," concludes the report.
According to the Organization for Economic Cooperation and Development (OECD), in 2002 Washington contributed 0.12 percent of its economy to ODA. This was the lowest share of the 22 nations examined, with the second lowest country, Italy, contributing 0.20 percent of its economy.
But Deese, one of the report's authors, warned against interpreting the paper as a call to simply increase foreign aid. He said the Bush administration should continue to pressure developing countries to make aid more effective.
"It's not necessarily that the U.S. should immediately increase its foreign aid budget to some set level but in fact it should continue to put some real meat behind a commitment by developing nations to do more and do it well."
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