Foreign Aid, 1946–Present

views updated


The end of the Second World War marked a fundamental shift in America's security that profoundly affected the nation's society, culture, and identity. Prior to World War II, America felt secure with the protection provided by the Atlantic and Pacific oceans. The country limited its engagement abroad and did not provide foreign aid to any appreciable degree. After World War II, with the beginning of the Cold War (1946–1991) and the proliferation of intercontinental ballistic missiles, the United States could not return to its prewar isolationism. Not only did this change require Americans to rearm but also to become directly involved in restoring prosperity in Europe and in the economic and political welfare of developing nations in the world. Through foreign aid programs, America sought to spread its ideals and to combat the Communist threat to the nation's security.

In the years after World War II, the United States quickly became the world's largest supplier of foreign aid. In fact, the United States assumed the position of a world superpower, and the government sought to implement a foreign policy that would maintain that status. By providing assistance to other countries, the United States hoped to strengthen a liberal, international economic order and promote stable, democratic governments. At the same time, it sought to avoid another economic depression and world war. The Cold War rivalry with the Soviet Union soon led the United States to supply foreign aid in response to national security concerns.

In the immediate post–World War II era, U.S. foreign aid concentrated on Europe. The Truman Doctrine, the Marshall Plan, and the North Atlantic Treaty Organization (NATO) provided economic and military aid to European countries to assist in their recovery from the war and to prevent the spread of Communism. The Truman Doctrine emerged from President Harry S. Truman's March 1947 announcement that the United States would provide financial and military assistance to Greece, which faced a Communist insurrection, and Turkey, which was menaced by Soviet expansion in the Mediterranean. Congress appropriated $400 million to fight these perceived Communist threats.

In June 1947 U.S. Secretary of State George C. Marshall proposed a program that would provide economic aid for the postwar recovery of European nations. The U.S. government feared that postwar poverty and unemployment in Europe could lead to the spread of Communism. The United States offered financial assistance to create a stable environment for democracy and capitalism. Although the United States initially offered aid to nearly all European countries, the Soviet Union and Eastern European countries declined Marshall Plan aid. The plan included more than $12 billion in loans and direct grants to seventeen countries in Western and Southern Europe between 1948 and 1951 to restore industrial and agricultural production, establish financial stability, and expand trade. The program was a great success. Although the Marshall Plan provided mainly economic assistance to the United States' European allies, military aid was funneled through NATO.

The success of the Marshall Plan inspired Truman's Point Four Program that began in 1949. Outlined in Truman's 1949 State of the Union address, this program marked the start of development assistance to poor countries. The United States hoped that the governments of these countries would use the funds to participate in the U.S. vision of the postwar international economic system.

In 1952 the Mutual Security Act became the basis for U.S. foreign policy. In a key development, military aid under Eisenhower took precedence over economic aid because of increased fears of a Communist threat. Between 1949 and 1953 only about one-sixth of U.S. foreign aid was military in nature. Between 1953 and 1961, however, more than half of all U.S. assistance took the form of military aid. Most foreign aid went to police and military forces fighting insurgencies that threatened governments allied with the United States.

By 1960 political support had declined for existing foreign aid programs both in Congress and in public opinion. President John F. Kennedy expressed a renewed commitment to foreign aid. The Kennedy administration was dissatisfied with current programs and worried that the economic collapse of developing countries would harm the national security of the United States.

In response, the United States government reorganized foreign aid in 1961 with the Foreign Assistance Act (FAA). The FAA led to the creation of the United States Agency for International Development (USAID), which unified existing foreign aid efforts. USAID was the first U.S. foreign aid program whose goal was long-term social and economic development.

One of the first programs implemented by USAID was the Alliance for Progress, which offered U.S. economic aid to the countries of Latin America. The Alliance for Progress was in large part a response to the 1959 Cuban Revolution, which established a Communist regime. The stated goals of the program were to maintain democracy in the region and to promote economic and social development. The Alliance for Progress did achieve some concrete results, such as the building of schools and hospitals, but in other key areas, such as land reform, was less successful. Furthermore, in the context of the Cold War, the United States became more concerned with anti-Communism rather than with maintaining democracy.

In 1961 the United States government also created the Peace Corps, an agency of volunteers whose purpose was to aid developing countries by sending skilled workers in fields such as education, agriculture, and health. The volunteers were to serve for two years in a developing country, speak the local language, and live at a level comparable to that of the residents of the host country. The program began with some 900 volunteers in 1961 and reached a peak in 1966 with more than 15,000 volunteers.

Several notable changes occurred in the 1970s and 1980s. In the early 1970s, concerns grew over existing foreign aid programs because of increasing opposition to the Vietnam War, worries over the fact that most aid was aimed at short-term military considerations, and a belief that aid was not producing concrete results for U.S. foreign policy. In response, U.S. foreign aid increasingly emphasized the poorest sections of developing nations in order to respond to "basic human needs."

Starting in the mid-1970s, the United States government increasingly linked aid to human rights. After the signing of the Camp David accords in 1978, significant amounts of U.S. foreign aid went to the Middle East, with Israel and Egypt receiving the largest share. During the 1980s, the Reagan administration funneled large amounts of aid to Central America to fight what the government viewed as Communist threats. The governments of El Salvador, Guatemala, and Honduras received much assistance in this period.

In 1989, near the end of the Cold War, the United States decreased the amount of foreign aid it provided. Not only did the overall amount of aid decline, the United States also closed numerous overseas aid missions. On the other hand, foreign aid did increase to the countries that emerged from the former Soviet Union, with Russia receiving much assistance. During the 1990s the United States also increased aid to countries involved in fighting the illegal drug trade, such as Colombia, Peru, and Bolivia.


Eberstadt, Nicholas. Foreign Aid and American Purpose. Washington, D.C.: American Enterprise Institute for Public Policy Research, 1988.

Hook, Steve, ed. Foreign Aid toward the Millennium. Boulder, CO: Lynne Rienner, 1996.

Schraeder, Peter. Intervention Into the 1990s: U.S. Foreign Policy in the Third World. Boulder, CO: Lynne Rienner, 1992.

Wood, Robert. From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy. Berkeley and Los Angeles: University of California Press, 1986.

Zimmerman, Robert. Dollars, Diplomacy, and Dependency: Dilemmas of U.S. Economic Aid. Boulder, CO: Lynne Rienner, 1993.

Ronald Young

See also:Churches, Mainstream; Eisenhower, Dwight D.; Human Rights; Johnson, Lyndon Baines; Kissinger, Henry; Marshall, George C.; Marshall Plan; Nixon, Richard M.; Nonalignment; Truman, Harry S.; Truman Doctrine .

About this article

Foreign Aid, 1946–Present

Updated About content Print Article