WASHINGTON, May 21 (IPS) - The 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 [The Other War: Global Poverty And The Millennium Challenge Account] released on Tuesday, 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 other donor 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 bipartisan support in Congress, we could still see positive development," he added.
The report comes only days before Congress is to send back legislation to President George W. Bush (news - web sites) responding to his State of the Union speech request for $15 billion over five years to fight the HIV/AIDS crisis in Africa and the Caribbean.
That request came on top of Bush'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 (news - web sites), 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 would be spent after 2006.
To further undermine the administration's MCA forecast, the report quotes figures from the Congressional Budget Office--a usually optimistic body--that estimate that actual MCA spending from 2004 through 2006 will be $1.7 billion, 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, 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 dollars to help reconstruct Iraq (news - web sites), 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 meagre 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, the report 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 from 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 Organisation for Economic Cooperation and Development, in 2002 Washington contributed 0.12 percent of its economy to development aid. This was the lowest share among 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."
source: http://story.news.yahoo.com/news?tmpl=story&u=/oneworld/20030522/wl_oneworld/118151053610546 29may03
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