Viewpoint: Welfare for Tyrants

Now Panama's strongman, General Manuel Noriega, is in trouble. Panamanians have been demonstrating against him for months. By adopting leftist rhetoric, Noriega has tried to win the worldwide immunity from hostile opinion enjoyed by socialist governments, but the riots have continued nonetheless.

It seems that the United States is now willing to let Noriega go down to defeat. Secretary of State George Shultz announced in the summer that U.S. foreign aid to Panama, about $25 million annually, was being "interrupted." In 1986 the U.S. also interrupted the flow of foreign aid to two countries—the Philippines and Haiti. Shortly thereafter the governments of both Ferdinand Marcos and "Baby Doc" Duvalier fell and both went into exile. It will be interesting to see whether the same thing happens to Noriega.

The events of 1986 suggest that foreign aid, far from buying us friends abroad, is frequently used to prop up tyrants. Look at what happens when the props are removed. Clarence Long, former Democratic chairman of the House committee that oversees foreign aid, has said that "the foreign aid bill is simply walking around money for the Secretary of State." He meant that its real purpose is to buy influence with foreign heads of state, whether or not the money helps to perpetuate unpopular or destructive policies pursued by its recipients.

Aid to Panama was suspended—as it had been earlier to Marcos and Duvalier—only when unrest there generated headlines in this country. At that point (in the secretary of state's mind) the U.S. domestic political cost of maintaining the status quo began to outweigh the supposed benefits of tranquil bilateral relations. Put another way, placating the White House became a more urgent priority than placating the Foreign Service.

From the point of view of propping up autocrats, the most important component of foreign aid is the category called Economic Support Funds (ESF). This is a U.S. Treasury check that is in effect put at the disposal of the recipient country's head of state. As one official at the U.S. Agency for International Development (AID) put it to me, ESF "leaves no local audit trail." With this money the local ruler can buy himself a Praetorian Guard. He can protect himself from his own citizens.

Foreign aid of this type should be considered as harmful to recipient countries as domestic welfare is to inner cities. One AID official has likened ESF to methadone—a drug that protects addicts from reality. To change the metaphor, when a car engine develops trouble, the defect can for a while be obscured by adding more oil. But when the driver finds he has to add more and more oil, at shorter intervals, if he's smart he probably gets the message that there is an underlying defect, and he takes the car in for repairs.

Ever-increasing doses of ESF likewise tell us that in all probability a foreign ruler is being spared the pain of correcting an underlying defect of government. Remove the "oil," or the ESF check, and the ruler suddenly knows that he is in trouble.

A look at AID's "Congressional Presentation" volumes, giving the details of foreign aid, shows that Panama received a $50-million ESF check in fiscal year 1985, supposedly "to enable AID to support the first elected Panamanian government in 16 years as it confronts the challenges of implementing the World Bank's structural adjustment program." (This is just an elaborate way of describing an attempt to buy Noriega's friendship. Notice also the way U.S. policy represents itself as being at the mercy of the World Bank.) By FY 1986 the ESF check had been reduced to $5 million, and now it is zero. (Current U.S. foreign aid in Panama is devoted to infrastructure projects.) So in a sense the foreign aid "prop" was already withdrawn a year ago.

Other countries that have in recent years received large and growing amounts of U.S. foreign aid in the form of ESF checks are: Israel, Egypt, the Sudan, Pakistan, the Philippines, El Salvador, Costa Rica, Honduras, and Jamaica. In the Reagan years, for example, the ESF "oil" to Ferdinand Marcos went from $50 million a year to $300 million in 1986. We are continuing to give unwarrantedly large amounts of money to his replacement, Mrs. Corazon Aquino, who would be better off and well advised to become independent of the United States as soon as possible. She should not hesitate to support the removal of U.S. bases as a means of achieving this independence.

Foreign countries not only don't need foreign aid. It is positively destructive to them—even when it isn't propping up a dictator. To cite just one example, domestic tranquility and economic performance in Israel have declined since we began dumping dollars on that country in the wake of the Camp David Accords. Rising unrest in Egypt can probably also be traced to U.S. aid.

After many disasters, Americans are beginning to learn that domestic welfare harms Americans. It is time that we also began to learn that foreign welfare harms foreigners.

Contributing Editor Tom Bethell is a media fellow at the Hoover Institution.