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What We Got For What We Gave
The American Experience With Foreign Aid
April/May 1978 | Volume 29, Issue 3
There was, however, one important exception to a generally unbending ideological approach. In 1948 Stalin expelled Yugoslavia from the Soviet camp, cutting off aid and trying to bring down President Tito. Yugoslavia remained staunchly Communist, anti-Russian but by no means pro-American. Congress, with some dissent, accepted the Truman administration’s arguments that it was in the American national interest to supply economic and later military aid in order to sustain Yugoslavia’s independence. Some Congressmen said the aid should be conditional on Yugoslavia’s renunciation of Communism and willingness to be aligned with the United States. The majority, however, saw that such conditions would, from Tito’s point of view, mean taking on one kind of dependence as the price of escaping from another. The United States did not insist on such conditions, although some Americans never could accept the idea that United States dollars were supporting a Communist state.
The transition from the Truman to the Eisenhower administration, from Secretary of State Dean Acheson to John Foster Dulles, was an illusory watershed. Dulles’ rhetoric made it appear that the Republicans were bolder, more determined to “roll back” Communism and “liberate” its captive nations. In fact there were no fundamental shifts in foreign policy or foreign aid, which throughout the 1950’s continued to be heavily military. In this decade the amount of covert aid dispensed by the CIA became significant, but the sums spent remain unknowable outside the agency to this day. Some money went to foreign politicians directly, some to political parties, some for paramilitary units, while some was filtered through ostensibly private philanthropic groups or commercial enterprises.
The name of the foreign aid agency was changed twice under Eisenhower: in 1953 from Mutual Security Administration to Foreign Operations Administration (FOA), and in 1955 to International Cooperation Administration (ICA). This was mostly just shuffling of the alphabet.
One important development of the Eisenhower era was the passage in 1954 of Public Law 480 whereby American food, then in surplus supply of unmanageable proportions, could be sold abroad for local currency. The United States would then spend the local currency for a range of aid projectseverything from the construction of military bases to upkeep of the American Embassy, to agricultural assistance, to grants for American scholars visiting the recipient country. Public Law 480 was often called the “Food for Peace” program. It has been an integral part of foreign aid ever since.
The Eisenhower years lacked the sense of excitement, of innovation, of triumph so evident in the late 1940’s. Numerous critics-many in the universities and a group which collectively could be called foreign policy intellectuals-charged that American foreign policy was stagnant. The time had come, they argued, for the United States to be true to its frontier heritage, to analyze the world’s problems, and to solve them. Military strength was not enough. The United States had lost the initiative and was too often simply reacting to the Soviet Union. America had to appeal to the ideals of mankind, all mankind, not just those who were ready to join us in one or more of John Foster Dulles’ proliferating alliance systems against the Soviet Union. Furthermore, the critics said, the United States should respect the natural desire of new nations to remain unaligned in the struggle between the Great Powers. Dulles, on the other hand, had condemned neutralism and often withheld aid to countries unwilling to be unequivocally on the American side. For example, he withdrew a promised loan to Egypt in 1956 for construction of the Aswan Dam because Egypt showed an interest in receiving aid from Russia. Egypt then precipitated the disastrous Suez crisis, and Russian aid built the dam.