The Ascent of South-South Aid: Strategic Motivations and
Strategic Effects
Stephen D. Collins
Kennesaw State University, 1000 Chastain Road, Kennesaw, GA, USA 30144.
E-mail: [email protected]
Abstract
The Global North has long employed its dominant position in development assistance as
an instrument to advance its common foreign policy objectives, including the promotion
of political and economic liberalization in the Global South. Recently, however, there has
been a profusion of new entrants into the donor community. These new aid donors reside
largely in the South, and are led by the emerging market states of Brazil, India, South
Africa, Venezuela and especially China. As these states possess foreign policy goals that
often diverge substantially from those of the North, this development may possess wideranging ramifications for states in both North and South.
This paper aims to examine the impact of this new source of foreign aid. First, this study
explores the breadth and depth of the aid provided by the leading donors of South-South
aid. The paper also seeks to assess the political motivations of the new Southern donor
states. Finally, the study assesses whether this new source of aid has provided recipient
states with more policy autonomy, and whether it has diminished the ability of the North
to leverage aid to influence policy in the global south.
Introduction
Developing states have traditionally looked north in search of development assistance.
During the long Cold War, the Global South looked north principally to the United States
and to the Soviet Union. These superpowers were typically obliging and often quite
generous, as aid to the developing world served an important self-serving strategic
function. America and Russia were engaged in a heated, fiercely contested competition to
gain influence over third-party states, and development assistance was an important tool
to achieve this end. The Cold War competition was often disastrous for the developing
world in terms of the armed conflict spawned by the superpower struggle; however, this
competition did increase the leverage of non-aligned states, as they could triangulate,
playing the superpowers off one another to maximize the amount of aid they could
secure. The disappearance of the Soviet Union and its foreign aid program, however,
diminished the autonomy of the South, and amplified the leverage capacity of American
aid, and therefore, its efficacy as a strategic tool. Consequently, in the inaugural decade
of the post-bipolar era, the United States enjoyed considerable success in the use of
foreign aid to shape the behavior of states in the developing world.
America’s virtual monopoly in the strategic use of foreign aid proved to be shortlived, however, as robust challengers to Washington’s foreign aid program materialized
at the dawn of the twenty-first century. Upon the heels of vigorous economic growth,
several emerging market states launched ambitious development assistance programs.
These emerging donors often adopted aid approaches with contrasted markedly with the
prevailing approaches of the U.S. and other Western donors. The new donors included
the rising star BRICS countries of Brazil, Russia, India, China, and South Africa – states
which shared similar recent development experiences with aid recipients as these states
are neighbors from the Global South (excepting, of course, Russia). Other new nonNorthern donors outside of the BRICS also emerged and made an impact, including Iran,
Saudi Arabia, and Venezuela. Among this sizable set of new donors from the Global
South, two states clearly stand out with respect to the magnitude and influence of their
foreign aid programs in the post-Northern aid monopoly era. China and Venezuela
established the two most ambitious and copiously-funded foreign aid programs. These
nascent aid programs also typically have worked at cross-purposes to U.S./Western
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foreign policy aims, potentially weakening the influence effect of Northern economic
assistance. This study examines the scope, the intentions, and the effects of the foreign
aid programs of China and Venezuela, and assesses their capacity to successfully
counterbalance Northern foreign aid and obstruct Western (especially U.S.) foreign
policy objectives. Finally, this paper explores the more recent emergence of Brazil as a
robust aid donor, its similarities and divergences in comparison to neighboring
Venezuela, and its potential to supplant and surpass Caracas as the Southern aid
alternative with the power to weaken the influence effect of U.S. foreign aid.
Theory and Practice of Strategic Foreign Aid
The strategic use of economic assets to influence foreign states is a long-established
practice in international relations. Thucydides’ History of the Peloponnesian War offers
perhaps the first recorded use of economic assets to influence foreign actors. The
Athenian strategist and author noted, in 5th century B.C., the use of bribes by Egypt to
attempt to induce a Spartan attack on Athens, and also the widely help belief that it was a
well placed bribe by Athenian leader Pericles to Spartan King Pleistoanax which stopped
a withering Spartan attack in its tracks.1 Francois de Callieres’ influential early-modern
discourse on economic statecraft, published in 1716, advocated the use of money as a
strategic foreign policy instrument, which, he contended, possesses the ability to
“harmonize the interests of the parties concerned.”2 America’s early statesmen, likewise,
saw utility in the strategic use of foreign aid. Benjamin Franklin advocated the use of
economic strategies for acquiring territory, categorizing military force for the same
purposes to be “futile and a waste of manpower and money.”3 Thomas Jefferson held the
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same affinity for economic instruments, and engineered - in the 1803 Louisiana Purchase
- the United States’ first major successful application of economic statecraft.
Although pecuniary transactions have a long and storied history in international
politics, foreign aid, per se, is largely a post-World War II innovation. Foreign aid is
comprised of two main components: official development assistance (ODA) and military
aid. The practice, therefore, involves the provision of financial assistance with the intent
to alleviate poverty and spur economic growth, and the provision of military equipment
and training to bolster stability and security. Thus, unlike earlier iterations of economic
statecraft, foreign aid does not, formally, involve an explicit quid-pro-quo (i.e., money in
exchange for territory, fealty, or other tangible concessions); but rather, ostensibly,
represents a benevolent endeavor to improve the material conditions of those living in
abject poverty, and the security of sovereign states. While altruistic motivations
undoubtedly play some causal role in foreign aid spending, it is conventionally believed
that national interest represents the principle motivation for the billions of dollars
allocated in aid to developing states. The strategic motivations behind foreign aid are
emphasized by the noted aid scholar Steven Hook, who maintains “…among thoughtful
observers of foreign aid – and among many of its recipients – the linkage between
national interest and foreign aid is axiomatic.”4
The Cold War served as the catalyst for foreign aid, as the superpower rivals
perceived aid as a valuable strategic instrument with which to gain influence over
nonaligned states. The United States valued aid for its potential to contain the spread of
communism by shoring up allies through military aid and to diminish the attraction of
communism through rapid economic growth. President Dwight D. Eisenhower - initially
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one of the more vociferous opponents of foreign aid - came to view it as a key instrument
of containment.5 Consequently, Eisenhower oversaw one of the largest aid budgets in
U.S. history.6
Paradoxically, as a consensus began to coalesce in official circles on the effectiveness
- indeed, the indispensability - of foreign aid as an instrument of statecraft, the academic
community came to a much different conclusion regarding foreign aid and other forms of
economic statecraft. Scholars of international relations, including Hans Morgenthau,
Henry Kissinger, and Klaus Knorr spoke of the futility, even counterproductivity, of the
strategic use of foreign aid. Morgenthau and Kissinger questioned the claim that aidinduced economic growth necessarily promotes stable democracy. The authors asserted
that, conversely, economic development can have virulent effects, including political
instability and radical revolution, leading to the rise of regimes hostile to U.S. interests.7
Klaus Knorr provided valuable theoretical insights into the relationship between the
structural attributes of the international system extant during the Cold War and the
effectiveness of foreign aid as a tool of strategic influence. Foreign aid possesses low
utility as an instrument of coercion during bipolar eras, according to Knorr, as
superpower rivalry provides aid recipients with access to alternative and offsetting aid
assistance. This environment, therefore, provides third party states with a considerable
degree of immunity from the coercive pressure of aid conditionality.8 Indeed, recipient
states shrewdly engaged in subaltern triangulation; playing the rival superpowers off one
another in order to extract massive aid packages, while conceding nothing more than
vague promises of amity. Egypt and India represent quintessential examples of this
practice, as Cairo and New Delhi obtained colossal amounts of foreign assistance from
both the United States and the Soviet Union, and yet remained non-aligned and
steadfastly independent.
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Foreign Aid in the Unipolar Era
As the bipolar system disintegrated in the wake of the Soviet Union’s collapse, a
unipolar configuration materialized and the balance of power in global economic
statecraft experienced a fundamental shift. The bargaining power of aid supplicants
markedly diminished. Recipient states lost their most powerful bargaining chip, the
ability to turn to a rival aid source. The United States did not acquire a monopoly position
in foreign aid, of course, as the U.S. was joined by twenty-two other major aid donor
states in the OECD Development Assistance Committee (DAC). America’s fellow DAC
members collectively contribute roughly double the amount of ODA given annually by
the United States. 9 Still, the strategic objectives of the DAC members are generally in
alignment with the United States in nearly all of the cardinal international policy areas,
including democracy and human rights, terrorism, and weapons proliferation. Therefore
the aid programs of the other donors rarely obstruct or nullify the strategic objectives of
U.S. aid, and in fact, typically reinforce these objectives. The absence of an authentic
superpower aid rival during the 1990s greatly amplified the leverage power of U.S. aid.
Despite a marked decline in foreign aid spending after the end of the Cold War–
which dropped by one-half in real terms – foreign aid became a more effective instrument
of statecraft for Washington.10 Promises to disburse, and threats to withhold, foreign aid
were used by the United States to advance liberal and realpolitic objectives, including
democratization, human rights, good governance, counternarcotics, counterterrorism,
counter nuclear proliferation, basing rights, and immunity for U.S. soldiers from the
International Criminal Court. Foreign aid sanctions played a supportive role, for example,
in the defense and promotion of democracy in Malawi (1992), Peru (1992), Guatemala
6
(1993), Zambia (1993), Niger (’98), and Serbia (‘96,’98). Aid from Washington to
democratic opposition movements, civic NGOs, and independent media also represented
one of the primary sinews of the post-Cold War wave of democratizations in Eastern
Europe, Africa, and Latin America. Aid from Washington help to foster several
successful people power revolutions, including in Chile, Mexico, Malawi, Ghana, Serbia,
Slovakia, Ukraine, Georgia, and Kyrgyzstan.
Foreign aid was likewise employed to promote objectives more explicitly related to
security. Economic incentives were used successfully by Washington to convince
Belarus, Kazakhstan, and Ukraine - inheritors of massive nuclear arsenals after the
disintegration of the Soviet Union - to agree to relinquish their nuclear programs. In
North Korea, aid has been unable to secure full compliance with nonproliferation norms;
and indeed Pyongyang has hedged and outright contravened several agreements which
exchanged de-nuclearization for aid. Still, the prevailing consensus is that aid has been a
useful constraint, and that North Korea’s nuclear arsenal would have been considerably
larger without the carrot of strategic aid
Counterterrorism cooperation from ‘frontline’ states has also improved partly as a
result of foreign aid. Prior to September 11, 2001, several frontline states, such as
Pakistan and Yemen, resisted or actively obstructed U.S. counterterrorism activities. 11
Following a geometric increase in U.S. aid after September 11 – rising from $10 million
in 2001 to over $1 billion in 2002 - Pakistan pledged to assist the U.S. “war on terrorism”
in the region.12 Islamabad agreed to permit the U.S. to use Pakistani territory as a
logistical base for operations in Afghanistan, it launched offensive operations against
militants in border regions, and it provided unprecedented levels of assistance to the FBI
7
and CIA in the capture of senior Al Qaeda officials.13 Security aid has also enhanced the
counterterrorism capabilities of a host of frontline states including: Pakistan, Afghanistan,
Yemen, Jordan, Turkey, the Central Asian states, the Philippines, and Indonesia. Large
increases in aid to the Central Asian Republics – from $200 million in 2001 to $440
million in 2002 - helped to secure forward operating bases and/or landing rights in
Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan,
establishing a critical support network for combat operations in Afghanistan.14 Aid to
Djibouti, strategically located at the nexus of North Africa and the Middle East, was
increased tenfold, which secured for the United States basing rights for an elite
counterterrorism unit.15
The primary factor contributing to the effectiveness of U.S. economic statecraft in the
immediate post-Cold War years was the virtual absence of other states willing and able to
counter American economic pressure with offsetting economic assistance. Therefore,
America’s near-monopoly position in the practice of economic statecraft is primarily
responsible for the unipolar era rise in effectiveness. If history is any guide, however,
unipolarity is a transient configuration in international politics, and thus the emergence of
competitors is to be expected.16
Indeed, approximately five years into the twenty-first century, significant foreign aid
rivals emerged, both on the global and on the regional level. China materialized as a
global foreign aid rival, and Venezuela emerged as a regional foreign aid competitor.
Both of these states have distributed billions in aid and have reached, in certain recipient
states, aid parity or aid supremacy in comparison with the United States. America was not
always the largest donor in each developing country even during the 1990s, with U.S. aid
8
levels eclipsed in certain cases by other donor-allies of Washington. What is novel about
the foreign aid programs of China and Venezuela, however, is the intent and potential
capacity of these programs to undermine the strategic goals of the United States and the
West. The following pages will explore these emergent practitioners of rival economic
statecraft, and assess their willingness and capacity to employ aid to counterbalance the
global influence of the United States and the West.
China’s Foreign Aid
Until recently, China’s ability to engage in economic statecraft was highly
circumscribed. Just thirty years ago China was mired in penury, with a GDP per capita of
$192, making it among the seven poorest states in the world.17 Likewise, China suffered
from staggering rates of malnutrition, and negligible currency reserves. Market reforms
introduced by Deng Xiaoping in the late 1970s, however, unleashed China’s economic
potential, and in the three decades since, China has experienced a record of economic
growth perhaps unparalleled in human history. China’s economy currently ranks as the
third largest in the world, measured in GDP; using purchasing power as a measure, China
ranks as the world’s second largest economy.18
China’s export-fueled economic growth has now provided it with the capacity to
employ foreign aid as an instrument of statecraft. Beijing has amassed gargantuan foreign
currency reserves in the past few years - valued in 2012 in excess of $3 trillion providing Chinese leaders with ample funds to launch a robust foreign aid program.19 As
China has manifestly gained the capacity to engage in economic statecraft, international
relations theory instructs that China would be expected to leverage its economic power to
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advance its national interests.20 Indeed, Beijing perceives the value of flexing its
economic muscle in order to advance several cardinal foreign policy objectives,
including: 1) acquiring preferential access to the crucial raw materials that fuel China’s
ever-expanding economy; 2) frustrating western designs to pressure authoritarian states to
introduce democratic reforms; 3) isolating Taiwan diplomatically; and 4) managing
security issues in its near abroad.
Beijing has markedly - by some measures, exponentially - increased its foreign aid
spending within the last decade. From less than $1 billion in 2002, China’s foreign aid
spending has skyrocketed perhaps beyond $31 billion.21 In 2009 and 2010, China
provided more loan assistance to developing countries than did the World Bank.22
China’s economic influence strategies have materialized in nearly every corner of the
globe. Africa has become a primary focus of Beijing’s strategic foreign aid program.
Chinese aid to Africa has surged from $100 million in the mid-1990s to as high as $18
billion in 2007.23 Plans for a Chinese “Marshall Plan” for Africa were announced in
November 2006 at the China-African economic summit in Beijing, where Chinese leader
Hu Jintao pledged to double direct aid to Africa by 2009, including offers of $5 billion in
preferential loans and export credits, and $5 billion in state-funded investments from
Chinese firms.24 Hu pledged substantial aid for the construction of schools, hospitals, and
disease-prevention clinics, promised to send agricultural advisors, and conduct programs
to train 15,000 African professionals.25 At a meeting in Shanghai in 2007, China boosted
promised support for the continent to $20 billion.26 Over $13 billion in loan assistance
was promised in a single bilateral deal, with Ghana, in September 2010.27
10
China’s aid program in Africa appears, prima facie, to coincide with U.S. goals to
fight hunger and disease, and to enhance education and economic development.
However, Chinese foreign aid often acts in ways that are antithetical to America’s
objectives in Africa. Beijing has provided massive sums of support to those regimes
explicitly targeted with economic pressure by the United States and its donor allies.
China’s aid has diminished the pressure of aid conditionality, hindering the ability of the
U.S. and its donor allies to leverage aid to induce good governance reforms in corruptionaddled states. Aid from Beijing has, likewise, offset the impact of aid suspensions against
states engaged in human rights atrocities and/or military aggression.
Sudan offers a prime example of the counterbalancing effect of Chinese aid in Africa.
At the same time that the United States and other western countries were attempting to
punish and isolate Sudan for its complicity in human rights abuses in Darfur - labeled as
genocide by Washington– China began increasing its economic ties to Khartoum. In
2004, Beijing invested more than $100 million to expand Sudan’s oil industry, and
currently, Chinese purchases account for one-half to two-thirds of Sudan’s oil revenues.28
During his visit to Khartoum in early 2007, Hu pledged that China would construct a rail
line for Sudan, and cancel $80 million of Sudanese debt. China has provided military and
diplomatic support to Khartoum as well -- becoming its leading arms supplier, and
consistently brandishing its Security Council veto to inhibit UN sanctions against the
Khartoum government.29
Zimbabwe’s experience parallels that of Sudan. China has employed its economic
assets to counterbalance efforts by the United States and other western nations to pressure
the Robert Mugabe-led regime to reverse its plunge into despotism. China has employed
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its UN veto to preempt sanctions against the Mugabe government, and increased aid to
Zimbabwe, making the country one of the top five African recipients of Chinese Exim
infrastructure loans.30 China has also provided food, aircraft and buses, funds to build
schools and medical facilities, and financing to renovate the national sports stadium.31 In
June 2009, Harare announced a Chinese offer of $950 million in loans to Zimbabwe.32
Beijing’s financial assistance has also reinforced Mugabe’s political control in more
direct ways. In an effort to bolster the fortunes of Mugabe’s party in advance of the 2005
national elections, China shipped to Zimbabwe riot gear and thousands of t-shirts
emblazoned with the logo of Mugabe’s party. Equipment to electronically jam the signals
of opposition radio broadcasts was also offered to Mugabe.33 Zimbabwe has also received
more than $200 million in arms from Beijing, including fighter aircraft, scores of military
vehicles, and a large stockpile of other weapons.34 Mugabe has rewarded Beijing for its
support by granting China preferential access to valuable natural resources.35
When Angola emerged from its decades-long civil war in 2002, Luanda entered into
aid negotiations with western donors and the IMF. The IMF insisted upon reforms that
would enhance transparency in Angola, wishing to steer the country away from endemic
corruption. When donor countries and the IMF balked at financing for Angola without
pledges of reform, China offered Angola, in 2004, $2 billion in unconditional economic
assistance.36 Subsequently, Beijing, tendered a highly generous bid of $2.2 billion for oil
rights.37 China’s aid is warmly received by Luanda, as the absence of conditions allows
the governing regime to avoid the governance reforms demanded by the Unites States
and the donor state community.
12
Asia, perhaps as expected, is another principle focus of China’s strategic foreign aid.
As with Africa, Chinese foreign aid to Asian states is motivated by a desire to obtain
preferential access to natural resources, and to insulate authoritarian regimes in the region
from western pressure. With respect to the former, Beijing has devoted considerable sums
to infrastructure development aid in Asia. In South Asia, China is building ports facilities
in every country in the region, including in Bangladesh, Myanmar, Pakistan, and Sri
Lanka.38 With regard to the latter, in several instances in Asia, Chinese foreign aid has
impeded U.S. foreign policy objectives. Myanmar’s military junta has been subject to
U.S. economic sanctions as a result of its widespread and well-documented human rights
abuses. Broader U.N.-sponsored sanctions would likely be more effective toward
inducing the reforms in Burma desired by the U.S. and its allies; however, China has
consistently wielded its veto to obstruct multilateral sanctions.39 Indeed, China’s support
for Myanmar extends further than the diplomatic realm, as China has extended
substantial development aid -- building roads, dams, and a deep water port. Myanmar has
reciprocated by granting China preferential access to scores of oil, natural gas,
hydropower, and mining projects.40
Cambodia recently entered into negotiations with the U.S., E.U., IMF, and other
traditional donors for some $600 million in new loans; a package which was conditioned
on adherence to governance reforms. China offered Cambodia essentially the same $600
million loan package; however, without any reform demands.41 The windfall of Chinese
aid significantly eased pressure on the Hun Sen government to implement the political
and economic reforms desired by Washington. China happens also to be Phnom Pen’s
leading supplier of military aid and internal security assistance.42
13
Direct counterbalancing of American influence has increased, as Beijing has boosted
aid to countries sanctioned for anti-democratic practices, and has paid for security
training specifically aimed at preempting democratic movements. Chinese assistance to
Thailand provides a classic example of strategic offsetting assistance. When, after the
2006 military coup in Thailand, Washington announced it would withdraw $29 million of
assistance to Bangkok, Beijing responded with a $49 million aid package – which more
than offset the effect of U.S. sanctions. Indeed, the regime netted an additional $20
million of aid. 43
China has made the containment of democracy a special priority in Central Asia, and
has devoted considerable funds toward this enterprise. Beijing has dramatically increased
financial assistance to bolster the authoritarian regimes of Central Asia, including a 2006
commitment of $2 billion in aid and business contracts for Kazakhstan, Kyrgyzstan,
Tajikistan and Uzbekistan - members of the Shanghai Cooperation Organization (SCO).44
Aid to the SCO states jumped some fivefold in 2009, when Hu announced a $10 billion
loan program to support the states during the global economic recession.45 In addition to
loans and investment, China has spent heavily on anti-democracy police training in
Central Asia, with some 1,000 personnel receiving instruction from Chinese internalsecurity trainers each year.46
Latin America has not traditionally received as much attention from Beijing, and
consequently aid has historically been negligible.47 China’s relationship with the region,
however, has undergone a sea-change over the past few years, with a burgeoning trade
connection and a dramatic expansion of aid. Aggregate financial assistance from China
has grown from practically zero before the turn of the 21st century, to an average of $10
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billion per year by 2011.48 In 2010 alone, China provided $37 billion worth of
development loans to Latin America; a sum greater than that contributed by the World
Bank, Inter-American Development Bank and United States Export-Import bank
combined.49 Around 2009, China began to greatly augment its largesse to the region,
doubling a development partnership with Venezuela to $12 billion, extending to
Argentina a $10 billion line of access to Chinese currency for trade activity, lending $1
billion to Ecuador for construction of a hydroelectric plant, and pledging a loan of $10
billion to Brazil’s national oil firm.50 While these financial infusions have been warmly
welcomed by the South American states, China is set to benefit by gaining preferential
access to energy resources, with Venezuela promising to nearly triple oil shipments to
China from 380,000 barrels to one million barrels.51 In addition to securing energy
resources, China has deployed strategic foreign aid to convince several regional states including Costa Rica, Dominica, and Grenada - to switch diplomatic recognition from
Taiwan to the PRC.52 Beijing announced in 2011 its intention to lend over $6 billion to
the Caribbean; a massive sum for an area not rich in energy or mineral resources.
Political, rather than mercantilist, impulses appear to be the most salient explanation for
such outsized aid to the Caribbean.53
The rapid and assertive emergence of China as major foreign aid donor begs the
question: Will China’s strategic foreign aid overwhelm and negate that of the United
States and its donor allies? China’s foreign aid is, indeed, large, growing, and often
antagonistic to the foreign policy objectives of Washington. China’s financial capacity
for economic statecraft is manifest, considering its astounding growth rates and the fiscal
discipline which has enabled it to acquire nearly one-third of the world’s foreign
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exchange reserves.54 That China has been able to maintain high rates of economic
growth during the recent global recession speaks to the juggernaut quality of its economy,
and the perils of predicting the coming demise of the Chinese miracle. The willingness of
China to use foreign aid as a strategic instrument is demonstrated by the outsized largesse
doled out by Beijing to those states subject to sanctions and various other forms of
economic pressure by the United States and its allies. While Beijing may incline more
toward “soft power” than militaristic approaches in its foreign relations, it has exhibited a
clear willingness to challenging Washington’s economic statecraft. Chinese support
mitigates the pain of U.S. pressure, and makes it easier for regimes such as those in
Zimbabwe, Sudan, Myanmar, Uzbekistan, and Venezuela, to resist U.S. demands for
reform.
While, it is clear that China has emerged as a serious challenger to U.S. efforts, and
has acquired the ability and will to complicate - even neutralize in isolated cases - U.S.
economic sanctions and inducements, China is not currently, nor is it likely to become an
insurmountable threat to the strategic effectiveness of American foreign aid. The bounded
threat of Chinese foreign aid is a function of its composition and its motivations. First,
mass media reports are often grossly hyperbolic in their characterization of Chinese
foreign aid. What is typically reported as Chinese foreign aid for a given state, is usually
a mélange of loans (concessional and market), infrastructure investments, foreign direct
investments, and business deals with Chinese state-owned enterprises. Meanwhile, grant
aid - which is the predominant form of aid given by the OECD’s DAC members - only
comprises perhaps 3% of China’s aid commitments.55 Therefore, much of what is
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reported in news accounts as Chinese foreign aid, does not meet the conventional
definition of official development assistance (ODA).56
Arriving at a definitive figure for the size of Chinese foreign aid is quite difficult.
China’s foreign aid spending is highly fragmented and opaque, and much activity is not
incorporated in the official Chinese Statistical Yearbook.57 A recent study drawn from
insights from well-connected Chinese scholars estimates China’s conventional foreign
aid at between $1.5 and $2 billion; far smaller than the oft-cited $31 billion estimate, and
less than one-tenth of U.S. aid.58 The bulk of Chinese “aid” is actually loans, which,
though typically concessional, must be repaid. Given the history of unsustainable debt
loads acquired in the late 20th century by developing states - especially in Africa Chinese loans may turn out to be more of a curse than a blessing. Indeed, G-7 finance
ministers, meeting in Singapore in 2007, urged China to exercise greater restraint in
extending massive loans to Africa in the midst of a global campaign to reduce African
indebtedness through loan forgiveness. United States Treasury officials have
characterized China as a “rogue creditor” engaging in “opportunistic lending.”59
Not only is Chinese foreign aid smaller than reported due to the relative paucity of
grant aid, but the loans and investments that are announced sometimes fail to materialize.
Beijing’s offers are actually signals of intent more than assured aid packages.60 This has
become apparent to some would-be recipients of Chinese aid in Africa. As commodity
prices plummeted in the midst of the global economic crisis, China began to retract some
of its investment assistance to African states, including in Guinea and Congo. These and
other governments have discovered that China’s investment aid consists of loans against
future revenue. When revenue falls short of expectations, governments are faced with
17
large debts.61 In response to the disillusionment in Guinea over China’s decision to
terminate a $1 billion dam project, the Chinese ambassador asserted, “The dam is not a
gift; it is an investment.” 62 The statement was a candid acknowledgement that a
considerable amount of Chinese “aid” is nothing more than for-profit Chinese foreign
investment.
China’s increased activity in foreign aid represents a manageable challenge for the
United States and its donor allies due not only to the limited size of China’s actual aid
offers, but also to the strategic motivations which drive the Chinese foreign aid program.
China’s foreign aid program often works to undercut U.S. efforts, yet Beijing’s use of
economic statecraft is not as wholly or deliberately antagonistic as was the Soviet
Union’s foreign aid program. Indeed, the Sino-American relationship is far more nuanced
than the unreservedly adversarial U.S.-Soviet relationship. China’s foreign aid spending
appears, indeed, to be motivated more by the “neo-mercantilist” strategy of securing
access to vital natural resources than by the desire to weaken the influence of the United
States; though this is assuredly one objective.
Although China often extends offsetting assistance to targets of U.S. sanctions, levels
of Chinese aid in a given state appear to correlate more to the size of energy and mineral
resources, than to whether that government is subject to economic pressure from the
United States. Multibillion dollar loan offers have been extended to resource-rich Brazil
(which has a complicated though not antagonistic relationship with Washington); while
Nicaragua and Cuba - currently subject to U.S. economic sanctions and thus obvious
candidates for offsetting aid - have received relatively little assistance from China. The
operative difference is that that Brazil is endowed with massive oil reserves, and
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Nicaragua and Cuba and not resource rich. In Syria, a country subject to U.S. sanctions,
but with small oil reserves and sharply declining output, Chinese aid has been meager.
Meanwhile, Beijing’s financial largesse for Nigeria, a solid American ally, has been
exceptionally large. Indeed Africa, where U.S. bilateral relations are perhaps the
strongest outside of Europe - and thus, where a foreign aid challenger is unlikely to gain
wholesale defectors - has received a disproportionately large share of Chinese foreign
aid.63
Unlike the Soviet Union, China will, on occasion, harmonize its economic statecraft
with the United States. Beijing joined the United States and Europe in the summer of
2008 in exerting pressure on Robert Mugabe to consent to a power sharing agreement
with the Zimbabwean opposition. By at least one account, it was Beijing’s decision to
leverage its considerable influence over Zimbabwe - as its lead economic patron - that
convinced Mugabe to finally capitulate to international pressure.64 In North Korea, China
joined with the West in pressuring Pyongyang to discontinue its nuclear program, after
the regime conducted a successful nuclear test in October 2006. Beijing suspended oil
assistance to North Korea, and voted in the UN Security Council with the U.S., Britain,
and France to impose arms sanctions on Pyongyang.65 China’s pressure played a pivotal
role in gaining North Korea’s acquiescence to the February 2007 agreement in which
Pyongyang agreed to begin shuttering its nuclear program. In both of these cases, China
was motivated by self-interest, as the crisis in Zimbabwe threatened to tarnish China’s
image ahead of the Beijing Olympics, and as China views nuclear proliferation on the
Korean peninsula to represent a significant security threat. Notwithstanding the
motivation for these decisions, China’s coordination of economic statecraft with the U.S.
19
and its allies provides evidence that Chinese strategic foreign aid is not exclusively
hostile to the West.
Despite the fact that Chinese aid is more limited than conventionally portrayed, and
not as motivated by strategic competition as was the Soviet Union’s aid program, it
would be misguided to dismiss the global influence of China’s foreign aid program.
Chinese foreign aid - broadly defined - is large enough to be a highly influential force in
the developing world and in emerging markets, and carries the capacity to significantly
counterbalance U.S./Western pressure, whether or not that is the intent of Beijing in a
given episode. Aid from China can hinder Northern donor efforts to foster systemic
political change, such as in Zimbabwe, Sudan, and Burma. China’s large, politically nonconditioned, loans can also impede efforts to employ aid to induce democracy and good
governance reforms in states with which the U.S./West retains more friendly relations;
e.g., Cambodia, Angola, and Congo. Many development scholars assert that these
reforms are essential in order for foreign aid to achieve its overt intent; that is, to spur
economic development and reduce poverty in aid recipients. China’s aid will continue to
be dispersed disproportionately to resource-rich states, and states in China’s near abroad.
In these states, Chinese aid will often, though not always, complicate the efforts of the
United States and its allies to promote democracy, human rights, good governance, arms
control, and other foreign policy objectives.
Venezuela’s Foreign Aid
After the United States, Venezuela has been the most active practitioner of economic
statecraft in the Western Hemisphere in the early years of the twenty-first century. With a
20
population of only 26 million, and just the 36th largest economy in the world, Venezuela
seems an unlikely heavyweight in the world of economic statecraft.66 However, at the
turn of the 21st century, Venezuela emerged as an exceptionally active practitioner of
economic influence strategies. While estimates of Venezuelan aid vary, Caracas is
reported to have provided as much as $80 billion dollars in foreign assistance to states in
Latin America and the Caribbean since Chavez rise to power in 1998; or approximately
$6 billion per year in aid.67 This assistance - which, like Chinese support, involves a
heavy mix of loans and investments - certainly rivals the aid allocated by Washington,
estimated at $2.5 billion per year for Latin America.68 Caracas’ ability to distribute such
massive largesse in recent years is a function of the rising price of oil, which spiked from
$12 per barrel in 1998 when Hugo Chavez was elected president, to nearly $150 per
barrel in mid-2008, slumping to below $100 barrel after the 2008 Economic Crisis, and
then in 2011 surging again past $100 per barrel. The Chavez government benefited
tremendously from the oil spike, as Venezuela possesses the world’s sixth largest
reserves of oil, and as Chavez orchestrated in 2002 the government takeover of the
national oil industry, giving the regime direct control over the nation’s oil wealth.
Venezuela became a leading participant in economic statecraft not solely due to the
price of oil, but also due to the ideological convictions and global leadership aspirations
of Hugo Chavez. Unlike China, Venezuela explicitly presents its foreign aid measures as
designed to frustrate American foreign policy aims, and counterbalance the influence of
the United States in the Western Hemisphere. Although Chavez distributes aid broadly
across the hemisphere, the largest amount of aid is distributed to those states which are
targets of American economic pressure.
21
Cuba, which has been a target of U.S. sanctions for five decades, has received a
desperately needed lifeline from Venezuela. The Chavez government provides Cuba each
day with up to 100,000 barrels of steeply discounted oil, and has invested heavily in
Cuba, including agreements in 2007 which promised $7 billion in investments.69 The
total amount of aid given to Cuba by the Chavez government has been estimated at $28.5
billion.70 The U.S. embargo on Cuba has been widely criticized abroad (and increasingly
in the U.S.) as ineffective and anachronistic. Still, some analysts predicted that the
demise of Soviet aid to Cuba would sharply increase the effectiveness of Washington’s
embargo and force the regime to agree to significant political reforms. Venezuela’s
assistance, however, substantially offsets the impact of the lost Soviet aid, and diminishes
the effectiveness of U.S. sanctions.
In Bolivia, substantial levels of aid from Venezuela have worked to hinder
Washington’s attempts to isolate the Evo Morales-led government. Chavez and Morales who earned the enmity of the United States by supporting the decriminalization of coca
farming - quickly established a close relationship based on their common left-oriented
social and economic ideologies. As of 2009, Chavez has extended nearly $7 billion in
total economic assistance to the Morales government.71 The support far exceeds the aid
provided by Washington; the United States gave just $120 million to Bolivia in 2006.72
Venezuelan aid works at direct cross-purposes to U.S. counternarcotics policy in South
America, as Caracas has launched an aid program designed to directly assist Bolivia’s
coca production. It has been estimated that Venezuelan aid could boost coca production
in Bolivia by 4,000 tons.73
22
The Chavez government has developed significant collaborative or patron
relationships with other well-established U.S. antagonists beyond Cuba. Venezuela has
recently forged with Iran a foreign assistance fund with the expressed purpose of
counterbalancing the influence of the United States.74 Chavez has also provided
significant support to Nicaragua’s Daniel Ortega, the former Marxist leader of Nicaragua
during the 1980s, who claimed a surprising victory in the 2006 Nicaraguan presidential
elections. His candidacy was aided by Chavez, who donated subsidized oil to Nicaragua,
distributing it through politicians linked to Ortega’s Sandinista party.75 Venezuela has
provided billions in aid to Nicaragua (some $5 billion between 2006 and 2009 alone),
which Ortega has used to bolster his regime by channeling government spending through
his Sandinista party.76 When the United States and the European Union suspended a
combined $107 million in development assistance to Nicaragua as a result of alleged
election fraud in 2008, Chavez ameliorated the pain of the aid sanctions by increasing
assistance to Managua by $50 million.77 In Honduras, with which the U.S. has
historically enjoyed close relations, Hugo Chavez has used $130 million in oil and loan
assistance to draw the country into the Bolivarian Alternative for the Americas (ALBA),
Chavez’s anti-U.S. regional bloc. The coercive impact of Washington’s threat to suspend
Millennium Challenge Account aid to Honduras -- due to the government’s perceived
lack of progress on anti-corruption initiatives -- has also been undermined by aid from
Caracas.78
Venezuela’s substantial foreign aid spending, coupled with the direct intentions of
Caracas’ to use its aid to counter the influence of the United States, has made Venezuela
a significant threat to the effectiveness United States’ economic statecraft efforts in the
23
Western Hemisphere. Venezuelan foreign aid has, at least partially, obstructed U.S.
foreign policy objectives in a multitude of issue areas, including democracy, human
rights, economic reform, and counternarcotics. Still, the ability of Venezuela to neutralize
the influence of U.S. is not without limits. As with China, Venezuelan aid is heavily
concentrated in loans and investments, and while appealing, this aid does not hold the
same allure as the grant aid provided by the United States. Second, due to the opacity of
Venezuela’s aid program, it is poorly understood how much pledged aid is actually
distributed.79 An additional challenge to Venezuela’s sustainability as a leading aid
donor, and a reliable counterweight to U.S. influence is the country’s outsized reliance on
oil revenue. Venezuela’s foreign aid program is wholly dependent on oil revenue, as oil
generates 80 percent of Venezuela’s export earnings, and 50 percent of government
revenues. Therefore, the sustainability of the aid program is contingent upon the market
price of oil and the government’s ability to reliably produce the commodity.80 With
respect to the latter, Venezuela’s state owned oil company, Petróleos de Venezuela, is
beset by poor management and, consequently, underperforming output. Petroleum output
stood at 3.4 million barrels per day when Chavez came to power, but declined to just 2.3
million barrels per day in 2008, and remained below 3 million barrels at the end of
2011.81 This decline has been masked by the sharp rise in the price of oil during Chavez’
reign. However, oil has fallen considerably from its July 2008 peak of $150 per barrel,
and Venezuela’s government revenues have accordingly declined. The government
announced in March 2009 an austerity program which would cut spending by some 20
percent.82
24
As the Chavez government is confronted with rising public discontent over its foreign
aid generosity, and cannot impose sharp cuts on antipoverty programs or risk alienating
its core constituency, cuts have fallen disproportionately on foreign aid spending.83 By
one estimate of projected government spending, Venezuela planned to cut foreign aid
spending in 2009 by nearly 90 percent from 2008 levels.84 Venezuela has, indeed, already
curtailed its foreign aid spending, as numerous investment projects have essentially been
suspended.85 Additionally the future of PetroCaribe – Venezuela’s regional oil aid
program - appeared in jeopardy in 2009, with an apparent freeze on new applicants
(Costa Rica’s request has been denied) and a proposed plan to raise up-front payments for
oil from 60 percent to 80 percent.86 The recovery of oil prices after 2009 rescued
PetroCaribe from the planned cuts; however, the episode cast into sharp relief how
Venezuelan aid may remain only as strong as the price of oil.
As a result of deep cuts to its foreign aid program, Venezuela is currently a less
formidable hemispheric foreign aid challenger to the United States. The current period
represents for Venezuela, however, merely a temporary quiescence in its economic
statecraft program. It would be hasty to disregard the Chavez regime as an important
actor in the foreign aid wars, as, though oil revenues are currently down from record
highs, it is reasonable to assume that oil prices will rise in the near future as the world
recovers from the present economic crises. Indeed, oil prices are likely to remain well
above historic averages for the foreseeable future, as a result of rising demand for oil
from emerging markets. By 2020, global demand for oil is expected to increase by 50
percent, due largely to the burgeoning economies of China, India, Brazil and other
25
emerging markets.87 Venezuela will likely remain possess the capacity to be an active and
influential participant in economic statecraft as long as the price of oil is high.
Venezuela’s role as an active agent in South-South aid is related, however, not only to
its ability to donate large sums of aid, but also its will to do so. Indeed, the prospect that
Venezuela - a modest-sized country with a large poor population of its own - will remain
committed to being one of the world’s leading aid donors into the future is highly
uncertain. It was Hugo Chavez alone who decided that Venezuela would become a
world-class aid donor and formidable aid competitor to the United States. This makes the
future of the aid program wholly dependent on the political fortunes and physical well
being of Chavez. With respect to the first element, Chavez’s continued residence in
Miraflores Palace is hardly guaranteed past this Fall, as he faces, in the upcoming
October 2012 elections, a vigorous challenger in Henrique Capriles and a more united
opposition.88 A variable which portends greater danger for the perpetuation of the
Venezuelan aid program is the health of its president. Chavez is battling cancer, which
was diagnosed in June 2011, and which returned after surgery in Cuba to remove a
massive tumor. Venezuela’s aid program may yet escape the present dangers through a
Chavez triumph over Capriles and health problems, and a sharp recovery in the price of
oil. Still, the future of Venezuela as a leading aid donor and peer competitor to the U.S.
aid program remains in serious doubt.
Brazil
The retrenchment of Venezuela’s aid program might suggest a return to an exclusively
North-South based donor-recipient dynamic within the Western Hemisphere.89 The
26
United States would once again become the only source of significant development
assistance within the hemisphere. Another alternative source for South-South aid has,
however, emerged. Brazil has quietly become a robust donor of development assistance
over the past few years. As Venezuelan aid declined (especially non-oil aid), a significant
portion of the decline was offset by a sharp rise in aid from Brazil. Divining Brazil’s total
aid commitment is challenging, as it is more multifaceted that Venezuela’s
(predominantly free or cheap oil). Brazil’s foreign aid is fragmented among various
agencies and includes both bilateral aid and funding to international organizations.
Brazil’s official development aid agency – the Brazilian Cooperation Agency (ABC) –
reported an increase in official foreign aid from $158 million in 2005 to some $400
million in 2010.90 Total aid commitments from Brasilia to the global South are actually
much higher. Much aid is disbursed through agencies outside of ABC, and considering
all humanitarian, technical, and loan assistance, Brazil’s aid may reach $4 billion a
year.91
Much of Brazilian aid (45 percent) was distributed within Latin America, but Brazil’s
assistance extends farther through the global South, with a substantial amount devoted to
Africa.92 Brazil views itself not just as a leader in Latin America, but also in the
Lusophone community, and therefore aid extends also to Portuguese-speaking states in
Africa such as Mozambique, Guinea-Bissau, and Angola, and in Asia, including East
Timor.93 Recently, Brazil’s aid has expanded well beyond the Lusaphone community in
Africa, with projects continent-wide; in 2012 thirty eight African countries were
recipients of Brazilian aid.94 Brazil has developed certain core development strengthens
and it focuses on these areas in its development aid program. Food aid and agricultural
27
technical assistance, and medical aid and public health technical assistance are the areas
upon which Brasilia has focused. It is in these areas that Brazil has developed a
reputation for innovative and progressive ideas.95
A feature making Brazil’s aid attractive to partner states in the Global South is
Brazilia’s commitment to condition-free aid, guaranteeing to respect aid recipients’
policy autonomy.96 The absence (or near-absence) of aid conditionality, does not signify
that there exists only altruistic motivations behind Brazil’s aid program. Analysts see
Brazil’s aid program as an extension of its soft power foreign policy.97 Brasilia hopes the
program serves to elevate Brazil’s stature in international politics (a long-standing
obsession), and also increase support for its petition to gain a permanent seat in the
United Nations Security Council.98 Development programs also serve to establish larger
markets for Brazilian industry.99
Brazil’s large and expanding foreign aid program does offer states in the Global South
an additional alternative to aid flows from the United States and the Global North. As is
the case with China, Brazil’s commitment to eschewing aid conditionality also holds the
potential to undermine pressure for reform in developing states, as leaders can now rebuff
demands for accountability and transparency as long as they can turn to unconditional
Brazilian aid. Similar to the case with Venezuela, Brazil has had few qualms developing
close ties with and providing assistance to authoritarian states, evoking the chagrin of the
United States especially.
However, Brazil’s aid approach diverges from both China and Venezuela in ways that
suggest it should be perceived as less of a direct challenge to the United States and the
West. First, unlike Venezuela’s program, Brasilia’s program is not as ideologically-
28
animated, and therefore is not intentionally antagonistic to U.S. aid foreign policy.
Brazilian aid is not disbursed disproportionately to regimes which have adversarial
relations with the United States, nor is it often used intentionally to offset the effect of
U.S. economic pressure. Indeed, Dilma Rousseff appears to be steering Brazil politically
away from polarizing regimes such as Iran and Venezuela. Second, unlike both the aid
provided by Venezuela and China, Brazilian assistance is infrequently sent as large sums
of aid in commodities or loans which can directly benefit regimes. Instead, Brazil’s aid is
oriented more towards grassroots-level development assistance, in the form of
agricultural and health aid, much of it provided as technical assistance.100 Therefore
Brazil rise appears to hew to the benefit of the South – which respect to additional aid
and policy autonomy – without an attendant threat to the objectives of the U.S. and other
Northern donors.
Conclusions
Development assistance emerged in the twentieth century and flowed unidirectionally
from the Global North to Global South. The flow of foreign aid in the twenty-first
century, however, has become solidly bidirectional, with emerging market states
establishing significant foreign aid programs of their own. Among the new aid donors,
two states distinguished themselves by dint of the size and the eagerness of their foreign
aid programs. The assistance programs of these rising foreign aid powers are not only
active and amply funded, but they also aim to counterbalance the political influence of
Northern (and especially U.S.) economic aid. The first state, Venezuela, constitutes a
regional foreign aid challenger, while the second, China, represents a global foreign aid
29
challenger. The rise of China and Venezuela to major donor status signaled an end to the
Northern essential monopoly of both foreign aid and economic statecraft.
Venezuela’s emergence as a foreign aid competitor to the United States in the Western
Hemisphere can be attributed to the rise in Caracas of a regime deeply opposed to
Washington’s foreign policy aims, concurrent with a historic spike in the price of oil.
Resource wealth has enabled Venezuela to offer generous - often multibillion dollar packages of loans and investments to neighboring states in an attempt to weaken the
influence of American foreign aid. Assistance from Venezuela has provided states in
Latin American and the Caribbean an alternative to U.S. and Western aid, and has
represented a lifeline for several governments subject to U.S. economic pressure.
The global economic recession and the consequent drop in oil prices from historic
highs in the first decade of the twenty-first century have, however, diminished
Venezuela’s ability to challenge the U.S. for dominance in aid to the Western
Hemisphere. Still, oil prices have already rebounded from recent lows and Venezuela’s
oil revenue, the source of its foreign aid largesse, may continue to rise as its vast
untapped oil deposits in the Orinoco become developed. Still, the sustainability of
Venezuela’s foreign aid program remains very uncertain as it rests upon the political
fortunes and physical health of Hugo Chavez who is facing significant threats to both his
political survival and his health.
While Venezuela constitutes a regional aid competitor, only China represents a truly
global foreign aid rival to the United States. China’s foreign aid program extends across
the entire developing world, offering billions of dollars in loans and investments to poor
states and emerging markets throughout Asia, Africa, and Latin America. In many areas,
30
China’s economic assistance matches and even surpasses that of the United States.
Chinese aid has provided the Global South with a genuine alternative to relying on
Northern development assistance and the political conditions that accompany such aid.
Beijing’s aid program also appears to have strengthened the resistance of numerous states
which are targets of U.S. and Western economic pressure and has weakened the ability of
the U.S. to leverage aid for democratic and economic reforms in many other states,
impairing progress on both human rights and development. China’s foreign aid program
also appears to be quite resilient; unlike Venezuela, China appears not to have
significantly curtailed its spending on foreign assistance in response to the global
economic crisis.
The rival dyad of foreign aid donors represents a significant challenge to the influence
of foreign aid from the U.S. and its donor allies. The challenge, while robust, is not as
potent as that posed by the Soviet aid program during the Cold War. The challenge
presented by the new aid donors is circumscribed by the composition of this aid, and by
the motivations which animate its use. With respect to the composition of aid from China
and Venezuela, it is comprised primarily of indirect assistance, such as loans and
investment promises, instead of grant aid - the more direct form of development
assistance which comprises the bulk of aid packages from the United States and other
OECD donor states. Therefore, the amount of aid actually provided by the rival aid
donors is more limited than is conventionally presented by mass media accounts. With
regard to the motivations which underpin this rival aid, the relationship between these
states (especially China) and the U.S. is far more multifaceted and nuanced than the
exclusively adversarial relationship maintained between the United States and the Soviet
31
Union. Consequently, these states are more selective in their efforts to counterbalance
U.S./Western foreign aid influence, and occasionally even align their use of strategic aid
with Washington.101 Furthermore, any additional aid that reaches impoverished
communities in the Global South does advance the goal of the North of stimulating
human development in poor countries. Brazil’s rapidly expanding foreign aid program,
likely to eclipse Venezuela’s as the second largest from the Global South, represents an
even more modest political challenge to Northern donor aid, while also providing an
alternative, and often innovative, path for poor countries in the Southern Hemisphere.
The Global South will continue to rely on the traditional donor community from the
Global North for many years to come. Its collective aid still dwarfs that provided by
China, Venezuela, Brazil, India, South Africa, and other emerging markets. Still, the
entrance of South-South aid has increased the political autonomy of aid recipients. This is
not an uncontroversial development. Advocates herald this change as a victory against
neoimperialism, and see the new aid as more likely to lead to real development. They
contend that Southern aid donors better understand the challenges of underdevelopment
and are more willing to partner with aid recipients and to give them a voice in their
development plans. Critics of the new aid donors view their indifference to political
considerations as a threat to the gains made in addressing poor governance as a root cause
of underdevelopment. Additionally, some critics see the new aid as opportunistic and
counterproductive, which (especially regarding China) aids the strategic and economic
interests of the donor states, while setting the stage for the next debt crisis in the Global
South. Furthermore, opponents view the aid alternatives as offsetting assistance which
complicates the efforts of the U.S. and West to use non-military means (economic
32
statecraft) to address systemic global challenges and injustices, including human rights
abuses, democratic backsliding, and weapons proliferation. In any event, the emergence
of South-South aid signals a substantial increase in the autonomy of aid recipients and a
decline in the efficacy of foreign aid as a foreign policy tool of influence for Washington
and the Global North.
NOTES
1
Thucydides, History of the Peloponnesian War, Translated by Rex Warner, London: Penguin, 1954, pp.
99, 137.
2
David Baldwin, Economic Statecraft, Princeton: Princeton University Press, 1985, p. 75.
3
Baldwin, Economic Statecraft, p. 90.
4
Steven Hook, National Interest and Foreign Aid, Boulder, CO: Lynne Rienner, 1995, p. xi.
5
Peter W. Rodman, More Precious Than Peace: The Cold War Struggle for the Third World, New York:
Charles Scribner’s Sons, 1994, pp. 62, 63.
6
For aid amounts in constant dollars and as a share of GDP see Lawrence Korb, “Foreign Aid and
Security: A Renewed Debate?,” in Louis A. Picard, Robert Groelsema, and Terry F. Buss, eds., Foreign
Aid and Foreign Policy: Lessons for the Next Half Century, Armonk, NY: M.E. Sharpe, 2008, pp. 35, 36.
7
See Hans Morgenthau, “Preface to a Political Theory of Foreign Aid” in Robert A. Goldwin, ed., Why
Foreign Aid? Two Messages by President Kennedy and Essays, Chicago: Rand McNally, 1963; and Henry
A. Kissinger, The Necessity for Choice: Prospects of American Foreign Policy, New York: Harper and
Brothers, 1961; as cited in Rodman, pp. 64, 65.
8
Klaus Knorr, Power and Wealth: The Political Economy of International Power, New York: Basic Books,
1973, pp. 150, 179.
9
For details on the membership and activities of the DAC see, OECD, “About the DAC,” available from
http://www.oecd.org/about/0,3347,en_2649_33721_1_1_1_1_1,00.html, (accessed June 27, 2009). On
comparative aid allocations by donor, see U.S. Congress, Congressional Research Service, Foreign Aid:
Understanding Data Used to Compare Donors, by Larry Nowels, May 2005, available from
http://www.fas.org/sgp/crs/row/RS22032.pdf, (accessed March 10, 2009).
10
For historical foreign aid figures see U.S. Congress, Congressional Research Service, Foreign Aid: An
Introductory Overview of U.S. Programs and Policy, by Larry Nowels and Curt Tarnoff, April 15, 2004,
available from http://pdf.dec.org/pdf_docs/PCAAB191.pdf, (accessed February 20, 2009).
11
See James Risen and Judith Miller, “Pakistani Intelligence Had Links to Al Qaeda, U.S. Officials Say,”
New York Times, October 29, 2001.
12
U.S. Congress, Congressional Research Service, “Pakistan-U.S. Relations,” by Alan Kronstadt, January
28, 2005, available from: http://www.fas.org/man/crs/IB94041.pdf (accessed September 19, 2009).
13
See “Pakistan: Net Around bin Laden Narrows,” Associated Press, March 11, 2003; and Raymond
Bonner, “Pakistan’s Bold Alliance: U.S. Ties Holding Firm,” New York Times, April 1, 2002.
14
Ahmed Rashid, Decent into Chaos: The U.S. and the Disaster in Pakistan, Afghanistan, and Central
Asia, New York: Penguin 2009, p. 163.
15
Alicia Ryu, “Djibouti/U.S. Economy,” VOA News Report, November 25, 2002, available from
http://www.globalsecurity.org/military/library/news/2002/11/mil-021125-295ea190.htm (accessed Jan 28,
2009); “Iraq: Bush says US opening aid office in Djibouti,” Agence France-Presse, January 21, 2003;
Embassy of the United States–Djibouti, “Developing a Stronger Djibouti,” available from
http://djibouti.usembassy.gov/development_aid_to_djibouti.html (accessed April 2, 2009).
16
See Robert Gilpin, War and Change in World Politics, Cambridge: Cambridge University Press, 1981.
33
17
On China’s GDP per capita ranking in 1980 see, Globalis, “GDP Per Capita 1980,” available from:
http://globalis.gvu.unu.edu/indicator.cfm?IndicatorID=19&Year=1980&Country=CN (accessed July 8,
2009). On China’s per capita GDP figures for 1980 see World Bank, World Development Indicators, as
cited in Bruce J. Dickerson, “China,” in Michael J. Sodaro, Comparative Politics, New York: McGraw
Hill, 2004, p 606.
18
Ruchir Sharma, “Too Large to Grow So Fast,” Newsweek, October 6, 2008; World Bank, “Gross
Domestic Product 2008,” available from:
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf, (accessed August 13, 2009);
World Bank, “Gross Domestic Product 2008 PPP”, available from:
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP_PPP.pdf (accessed August 13,
2009); World Bank, Quick Reference Tables, “Total GDP 2005,” available from www.worldbank.org,
(accessed August 27, 2009); and World Bank, Quick Reference Tables, “PPP 2005,” available from
www.worldbank.org, (accessed August 27, 2009).
19
Bloomberg, “China Foreign Reserves Have First Quarterly Decline Since Asian ’98 Crisis,” January 13,
2012, available from http://www.bloomberg.com/news/2012-01-13/china-foreign-exchange-reserves-dropfor-first-quarter-in-more-than-decade.html.
15, 2009.
20
International relations theorists since Thucydides, writing in 5th century B.C., have chronicled the ways
in which rising states integrate economic power into their national grand strategies. Perhaps the most
influential modern treatise on the subject is Gilpin, War and Change in World Politics.
21
New York University Wagner School, Understanding Chinese Foreign Aid: A Look at
China’s Development Assistance to Africa, Southeast Asia, and Latin America, report
prepared for the U.S. Congress, Congressional Research Service, April 25, 2008, as cited in U.S. Congress,
Congressional Research Service, Comparing Global Influence: China’s and U.S. Diplomacy, Foreign Aid,
and Investment in the Developing World, Thomas Lum, ed., August 15, 2008, available from
http://www.fas.org/sgp/crs/row/RL34620.pdf, (accessed July 10, 2009).
22
U.S.-China Economic and Security Review Commission, “China’s Foreign Assistance in Review:
Implications for the United States,” September 1, 2011, p. 4. Available from
http://www.uscc.gov/researchpapers/2011/9_1_%202011_ChinasForeignAssistanceinReview.pdf (accessed
June 6, 2012); Steven Duke, BBC News, “China’s Global Reach: Lending More than the World Bank,”
December 8, 2011, Available from http://www.bbc.co.uk/news/business-16092634 (accessed December 8,
2011).
23
On China’s aid to Africa in the 1990s see Joshua Kurlantzick: Charm Offensive: How China's Soft Power
Is Transforming the World, New Haven, CT: Yale Univ Press 2007, p. 98. The larger figure of $18 billion
is stated in U.S. Congress, Congressional Research Service, Chinese Foreign Aid Activities in Africa, Latin
America, and Southeast Asia, by Thomas Lum, Hannah Fischer, Julissa Gomez-Granger, and Anne Leland,
February 25, 2009, p. 8, available from http://www.fas.org/sgp/crs/row/R40361.pdf (accessed August 30,
2009). Two other prominent studies of China’s aid to Africa place it approximately between $1 billion and
$3 billion. See Carol Lancaster, “The Chinese Aid System,” Center for Global Development, June 2007, p.
3, available from: http://www.cgdev.org/content/publications/detail/13953, (accessed June 4, 2009); and
Kurlantzick: Charm Offensive, p. 98.
24
The Associated Press, “China Pledges to Double Aid to Africa,” November 4, 2006.
25
Ibid
26
Freedom House, Radio Free Europe/Radio Liberty, Radio Free Asia, Undermining Democracy: 21st
Century Authoritarians, June 2009, available from:
http://www.underminingdemocracy.org/files/UnderminingDemocracy_Full.pdf, (accessed August 11,
2009).
27
Will Connors, “China Extends Africa Push With Loans, Deal in Ghana,” Wall Street Journal, September
24, 2010.
28
Esther Pan, “China, Africa, and Oil,” Council on Foreign Relations, January 26, 2007, available from
http://www.cfr.org/publication/9557/, (accessed June 8, 2008); The Economist, “Never too Late to
Scramble,” Oct 26, 2006; New York Times, “China Courts Africa, Angling for Strategic Gains,” Nov 3,
2006.
29
Joshua Eisenman, Joshua Kurlantzick, “China’s Africa Strategy,” Current History, Vol. 105, No. 691
(May 2006): 219-224; Pan, “China, Africa, and Oil.”
34
30
U.S. Congress, Congressional Research Service, Comparing Global Influence, p. 135.
Xinhua, “China Denies Stopping Aid To Zimbabwe,” September 5, 2007, available from
http://www.china.org.cn/archive/2007-09/05/content_1223305.htm, (accessed September 20, 2009).
32
Celia W. Dugger and Michael Wines, “Zimbabwe Says China is Giving It Loans,” The New York Times,
June 30, 2009; The Economist, “Chinese Aid to Africa, Spreading Its Bets, and its Gold,” July 2, 2009.
33
Eisenman and Kurlantzick, “China’s Africa Strategy,”
34
Times Online, “Dockers Refuse to Unload China Arms Shipment for Zimbabwe,” April 18, 2008.
Available from http://www.timesonline.co.uk/tol/news/world/africa/article3772113.ece, (accessed February
12, 2009).
35
Louisa Lombard, “Africa’s China Card,” Foreign Policy, Apr 11, 2006, available from
http://www.foreignpolicy.com/story/cms.php?story_id=3419, (accessed June 11, 2008).
36
Joseph Kahn, “China Courts Africa, Angling for Strategic Gains,” New York Times, November 2, 2006.
37
Henry Lee and Dan Shalmon, “Searching for Oil: China’s Oil Strategies in Africa,” in Robert I. Rotberg,
ed., China into Africa: Trade, Aid, and Influence, Baltimore: Brookings Institution Press, 2008, p. 120.
38
Vikas Bijaj, “India Worries as China Builds Ports in South Asia,” The New York Times, Febraury 16,
2010.
39
Colum Lynch, “UN Offers Aid Incentives to Burma.” Washington Post, May 26, 2006.
40
Brian McCartan, “China’s Footprint in Myanmar Expands,” Asia Times Online, November 1, 2008,
available from http://www.atimes.com/atimes/China_Business/JK01Cb02.html, (accessed February 1,
2009); Jane Perlez, “China Competes With West in Aid to Neighbors,” New York Times, September 18,
2006.
41
Perlez, “China Competes With West in Aid to Neighbors.”
42
Freedom House, Radio Free Europe/Radio Liberty, Radio Free Asia, Undermining Democracy: 21st
Century Authoritarians, p.25.
43
U.S. Congress, Congressional Research Service, Comparing Global Influence, p. 86.
44
Gulnoza Saidazimova, “China: Beijing Makes Further Economic Inroads Into Central Asia,” June 21,
2006, Radio Free Europe/Radio Liberty, available from http://www.rferl.org/content/article/1069352.html,
(accessed July 28, 2009).
45
Lyubov Pronina and Lucian Kim, “China, Russia Woo Central Asian Countries With Bailout Cash,”
Bloomberg, June 16, 2009, available from
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBzpsQgJ68dA (accessed August 30, 2009).
46
Freedom House, Radio Free Europe/Radio Liberty, Radio Free Asia, Undermining Democracy: 21st
Century Authoritarians, p.25.
47
Kurlantzick: Charm Offensive, p. 98.
48
Kevin Gallagher, “Forget the received wisdom: Chinese finance in Latin America is a win-win,”
Guardian, March 16, 2012; U.S. Congress, Congressional Research Service, Chinese Foreign Aid
Activities in Africa, Latin America, and Southeast Asia, p. 14; Kurlantzick: Charm Offensive, p. 98.
49
Gallagher, “Forget the received wisdom: Chinese finance in Latin America is a win-win.”
50
Simon Romero and Alexei Barrionuevo, “Deals Help China Expand Its Sway in Latin America,” New
York Times, April 16, 2009.
51
Romero and Barrionuevo, “Deals Help China Expand Its Sway in Latin America.”
52
U.S. Congress, Congressional Research Service, Comparing Global Influence, p. 163.
53
Randal Archibold, “China Makes Inroads in the Caribbean, Catching U.S. Notice,” The New York Times,
April 7, 2012.
54
U.S. Central Intelligence Agency, The World Factbook, available from
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2188rank.html (accessed Aug 3,
2009); The Economist, “Foreign Exchange Reserves,” July 16, 2009.
55
U.S. Congress, Congressional Research Service, Comparing Global Influence.
56
OECD defines ODA as a financial flow which is “administered with the promotion of the economic
development and welfare of developing countries as its main objective; and is concessional in character and
conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent).” See,
Organization for Economic Co-operation and Development, “Is it ODA,” November 2008, available from:
http://www.oecd.org/dataoecd/21/21/34086975.pdf, (accessed July 12, 2009).
57
Lancaster, “The Chinese Aid System.”
31
35
58
Ibid. For figures and details on U.S. foreign aid allocations see, USAID “US Overseas Loans and Grants
-The Greenbook,” available from http://qesdb.usaid.gov/gbk/gbk2007.pdf, (accessed May 12, 2009); and
The U.S. Department of State, FY 2009 International Affairs Request, available from
http://www.state.gov/documents/organization/101416.pdf, (accessed August 12, 2009).
59
Michael M. Phillips, “G-7 to Warn China Over Costly Loans to Poor Countries,” The Wall Street
Journal, September 15, 2006; Chris McGreal, “Chinese Aid to Africa May Do More Harm than Good,
Warns Benn,” The Guardian, February 8, 2007.
60
Kurlantzick, Charm Offensive, pp. 98, 99.
61
Lydia Polgreen, “As Chinese Investment in Africa Drops, Hope Sinks,” The New York Times, March 26,
2009.
62
Polgreen, “As Chinese Investment in Africa Drops, Hope Sinks.”
63
On perceptions of the United States in Africa see Pew Research Center, “Pew Global Attitudes Project,”
July 24, 2007, available from http://pewglobal.org/reports/display.php?ReportID=257, (accessed July 9,
2009).
64
Ian Evans, “Robert Mugabe forced into talks with opposition after China told him 'to behave',”
Telegraph, July 26, 2008.
65
Joseph Kahn, “China May Be Using Oil to Press North Korea,” New York Times, Oct 31, 2006.
66
World Bank, Total GDP 2005, available from
http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS, (accessed June 18, 2009).
67
Frank Bajak, “Chavez Beneficiaries Gird for Lost Aid,” Associated Press, February 25, 2012; The
Economist, “Development Aid from Authoritarian Regimes,” June 4, 2009; Martin Arostegui, “Chavez Hit
Hard by Cheap Oil,” Washington Times, January 19, 2009.
68
Indeed, a full one-half of U.S. aid to the region consists of military and counternarcotics assistance. See,
Juan Forero, “Chavez Seeking Foreign Allies, Spends Billions,” New York Times, April 4, 2006; and U.S.
Congress, Congressional Research Service, “U.S. Foreign Assistance to Latin America and the Caribbean:
FY2006-FY2008,” December 28, 2007, available from http://pdf.usaid.gov/pdf_docs/PCAAB690.pdf,
(accessed August 12, 2009.)
69
Cesar J. Alvarez and Stephanie Hanson, “Venezuela’s Oil-Based Economy,” February 9, 2009, Council
on Foreign Relations. Available at
http://www.cfr.org/publication/12089/venezuelas_oilbased_economy.html, (accessed August 14, 2009.)
70
Frank Bajak, “Chavez Beneficiaries Gird for Lost Aid “; Arostegui, “Chavez Hit Hard by Cheap Oil.”
71
Alvarez and Hanson, “Venezuela’s Oil-Based Economy.”
72
Simon Romero, “Venezuela Rivals U.S. in Aid to Bolivia,” New York Times, February 23, 2007.
73
Chris Kraul, “Chavez aid Bolivia with coca-leaf plan,” Chicago Tribune, Feb 8, 2007.
74
Associated Press, “Venezuela, Iran to finance opposition to U.S.,” Jan 14, 2006; Romero, “Venezuela
Rivals U.S. in Aid to Bolivia.”
75
Jill Replogle and James C. McKinley Jr., “Ortega leads Nicaragua vote,” International Herald Tribune,
November 6, 2006.
76
James McKinley, “Patronage Stirs Fears in Nicaragua,” New York Times, May 4, 2008; Arostegui,
“Chavez Hit Hard by Cheap Oil.”
77
Blake Schmidt, “EU suspends budget support to Nicaragua,” TicoTimes.net, December 17, 2008,
available from http://www.ticotimes.net/dailyarchive/2008_12/1217082.htm, (accessed June 12, 2009); and
Tim Rogers, “Ortega leans on Venezuela amid aid cuts,” NicaTimes.net, Dec 5, 2008, available from
http://www.nicatimes.net/nicaarchive/2008_12/1205083.htm. (accessed August 15, 2009)
78
The Economist, “Zelaya plays the Chávez card” October 30, 2008.
79
Alvarez and Hanson, “Venezuela’s Oil-Based Economy.”
80
Ibid.
81
Simon Romero, “Chávez Lets West Make Oil Bids as Prices Plunge,” New York Times, January 15,
2009; Mariana Paraga, “Venezuela Says Oil Output rose to 2.99 mln bpd in 2011,” Reuters, March 21,
2012.
36
82
The Economist,” Venezuela’s Budget Cuts,” March 26, 2009.
On public discontent with the levels of foreign aid spending in Venezuela see: Juan Forero, “Chavez
Seeking Foreign Allies, Spends Billions;” Juan Forero, “Chavez influences wanes in Latin America,”
Washington Post, May 17, 2011.
84
Simon Romero, “Venezuela’s Hope of More Sway Dims As Riches Dip.”
85
Juan Forero, “Chavez influences wanes in Latin America.”
86
BBC Caribbean, “A Case for PetroCaribe,” Aug 7, 2009, available from
http://www.bbc.co.uk/caribbean/news/story/2009/08/printable/090805_petrocaribe.shtml, (accessed Aug
22, 2009); Simon Romero, “Venezuela’s Hope of More Sway Dims As Riches Dip,” New York Times, May
20, 2009; BBC Caribbean, “PetroCaribe,” March 9, 2010, available from
http://www.bbc.co.uk/caribbean/news/story/2010/03/100308_jessop_petrocaribe.shtml (accessed June 12,
2012)
87
George Magnus, “World is Heading for Oil Price Shock,” The Financial Times, August 16, 2005,
available from http://yaleglobal.yale.edu/display.article?id=6154, (accessed July 25, 2009).
88
William Neuman, “Opposition Voters in Venezuela Pick a Challenger for Chavez, The New York Times,
February 12, 2012.
89
Outside of the hemisphere, South-South linkages would still remain with the substantial aid inflows from
China.
90
Fabiana Frayssinet, “Brazil, Emerging South-South Donor,” Inter Press Service, March 1, 2012.
Available from http://www.globalissues.org/news/2012/03/01/12874.
91
Economist, “Speak Softly and Carry a Blank Check,” July 15, 2010.
92
Fabiana Frayssinet, “Brazil, Emerging South-South Donor.”
93
Kellee Usher, “Brazil: Aid from Below,” International Affairs Review, Vol. 20, No. 1, Summer 2011, p.
2; The Guardian, :Who’s who among the new aid donors?,” October 25, 2011.
94
Thierry Ogier, “Beyond Trade: Brazil’s Aid to Africa,” The Latin Business Chronicle, March 6, 2012.
available from: http://www.latinbusinesschronicle.com/app/article.aspx?id=5522.
95
Kelley Lee and Eduardo Gomez, “Brazil’s Ascendance: The Soft Power of Global Health Diplomacy,”
The European Business Review, January-February 2011; The Guardian, :Who’s who among the new aid
donors?,” Economist, “Speak Softly and Carry a Blank Check.”
96
Kellee Usher, “Brazil: Aid from Below,” International Affairs Review, Vol. 20, No. 1, Summer 2011, p.
3.
97
Economist, “Speak Softly and Carry a Blank Check;” Lee and Eduardo Gomez, “Brazil’s Ascendance:
The Soft Power of Global Health Diplomacy.”
98
Elizabeth Dickinson, “Look Who’s Saving the World,” Christian Science Monitor, March 26, 2012;
Economist, “Speak Softly and Carry a Blank Check.”
99
Elizabeth Dickinson, “Look Who’s Saving the World.”
100
Economist, “Speak Softly and Carry a Blank Check;.” Kellee Usher, “Brazil: Aid from Below,” p. 6.
101
Caracas expresses perhaps the most overtly antagonistic posture versus the U.S. of the three. Still, even
Caracas and Washington have aligned their strategic aid, including in 2009 in the case of the military coup
against the elected president of Honduras.
83
37