‘We give to everybody. We’re stupid,’ Trump recently said of giving aid to foreign nations
Former President Donald Trump is hitting the campaign trail, gearing up to outline his potential foreign policy plans if he’s re-elected. One of his big talking points? Changing how we give foreign aid.
In a recent speech in South Carolina, Trump pointed out that there’s talk of handing out almost a hundred billion dollars to a handful of countries. He stopped and asked, “Why do we do this?” Then he suggested something different: instead of just handing over all that money, why not give it as a loan?
It’s a simple idea, but it could change a lot. By giving aid as loans, Trump thinks countries will be more motivated to use the money wisely and pay it back. It’s all about making sure our aid makes a real difference and is used responsibly.
So, if Trump gets another term, expect to see some changes in how America helps out around the world.
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Throughout the primary season, former President Trump’s relentless series of rallies and campaign speeches have dominated media coverage, particularly focusing on his commentary regarding immigration, the economy, critiques of President Biden’s performance, and even his opinions on NATO.
Despite facing minimal opposition in the primaries, with his last GOP rival, former South Carolina Governor Nikki Haley, suspending her campaign recently, Trump has continued to outline his vision for U.S. foreign policy. A notable aspect of this vision is his proposal to shift towards a loan-based system for foreign aid, departing from the traditional practice of providing grants that do not require repayment.
Trump’s emphasis on transitioning to a loan system for foreign aid suggests a departure from previous U.S. policies, signaling a desire for greater accountability and sustainability in America’s assistance to foreign nations. This proposed shift aligns with Trump’s broader agenda of prioritizing American interests and promoting fiscal responsibility in international relations.
During a recent event in Virginia, Trump highlighted how he utilized foreign aid as a means of exerting pressure on three Central American nations – El Salvador, Guatemala, and Honduras – shortly after his election in 2016.
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“At the Richmond rally, I recalled my arrival at the White House in 2016, where I was met by generals. I immediately instructed them to remove MS-13 gang members. They informed me that these individuals wouldn’t be accepted back,” Trump recounted.
“At the Richmond rally, I recounted my early days in the White House in 2016. Upon my arrival, I instructed the generals to address the MS-13 issue. However, they informed me that these individuals wouldn’t be accepted back into their home countries,” Trump recalled.
“I inquired about which countries were involved, and they mentioned those three countries. Curious about our financial aid to them, I asked, ‘How much foreign aid do we give them?’ The response was approximately $750 million a year. That amount seemed trivial compared to what we give to others. It struck me as foolish. They’re getting $750 million,” he continued. “So, I took swift action and immediately cut off all funds to those three countries. The following day, almost simultaneously but separately, I received calls from the presidents of those nations: ‘Sir, I believe there’s been a misunderstanding.'”
According to US Newzs Digital, Peter Doran, an adjunct senior fellow at the Foundation for Defense of Democracies, predicts that if Trump wins on November 5th, the United States can anticipate a more assertive approach from a potential Trump 2.0 administration in leveraging foreign policies on the global stage.
Doran stated, “While everyone is captivated by the spectacle, Trump is systematically presenting a well-defined foreign policy vision for his potential second term at these rallies, week by week.”
“Foreign loans are really helpful when they’re within a country’s budget. It’s like borrowing money for a project that’s guaranteed to make a profit and where you know you can pay back what you owe. Take the example of lithium mining in Chile, it’s a perfect case. American companies want to mine lithium there for all sorts of batteries, but they’re stuck because they don’t have access to ports to ship the lithium.”
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“So, in a country like Chile, which is relatively close and inside America’s interests … a loan to a country like Chile to develop links could assist U.S. companies. And that would challenge China because it’s a smart investment,” he argued.
In the 1990s, foreign nations in Africa were swimming in debt owed to the U.S. and other creditors, which spurred nations such as the U.S. to back away from delivering loans to nations that likely would not pay them back and instead deliver aid in the form of grants.
“Today, low-income countries are facing fewer debt challenges than they did 25 years ago, thanks in large part to initiatives like the Heavily Indebted Poor Countries program. This initiative significantly reduced overwhelming debt burdens across regions like sub-Saharan Africa.
While debt ratios are lower than they were in the mid-1990s, there’s been a gradual increase in debt over the past decade. Additionally, the changing landscape of creditors adds complexity to debt restructuring.
In the past, heavily indebted nations sought assistance from entities like the Paris Club, a group of creditor countries dedicated to finding solutions for indebted nations, as well as private banks and other institutions.”
“Today, China and private bondholders have become major players in lending,” the post continues.
“While the U.S. shifted towards offering grants instead of loans in the early 2000s, China intensified its lending activities, doubling down on loans,” Doran explained.
“This revelation is astonishing. Consider all the countries between 2006 and 2020 that found themselves unable to repay their loans,” Doran noted. “This situation forced them to turn to the IMF for assistance, effectively defaulting on their loans. They would say, ‘We can’t repay our loans, and we need IMF support to help us navigate through debt negotiations.'”
“In 2006, China held just 2% of the debt owed by struggling poor countries unable to repay their loans. However, by 2020, that figure had surged to 18%, according to IMF data. Meanwhile, the portion of external debt owed to Paris Club creditors dropped from 28% in 2006 to 11% in 2020.
“So, when we look at all the countries worldwide facing loan repayment challenges, China initially held a mere 2% stake but eventually became the primary lender to almost a fifth of these countries that encountered financial difficulties,” Doran highlighted.”
“An Associated Press article from last year highlighted China as the ‘world’s biggest and most unforgiving government lender,’ noting its actions are depleting foreign currency reserves in countries like Pakistan, Kenya, Zambia, Laos, and Mongolia.
The U.S. has an opportunity for ‘net positive’ outcomes in foreign aid loans if its leaders learn from China’s missteps.
“If we opt not to emulate the Chinese model and instead develop an American approach that fosters economic success, it could lead to a net negative for China and a net positive for the United States. We can draw inspiration from past successes such as the Marshall Plan and the Lend-Lease program,” Doran suggested.”
“Doran highlighted the Marshall Plan as a framework worth studying, particularly in the event of a second Trump administration.
The Lend-Lease Act, a policy from the World War II era, enabled the U.S. to lend or lease war supplies to nations deemed crucial for U.S. defense.
On the other hand, the Marshall Plan, signed by President Harry Truman after World War II, aimed to offer economic assistance to European nations as they reconstructed their infrastructure and economies following the defeat of Nazi Germany.”
“Doran clarified that the Marshall Plan was not simply about providing free money. Instead, it established a credit system where countries could purchase goods from America and utilize a bank account in a U.S. bank to draw on the credit. This arrangement ensured that the money remained in the United States while the goods were exported overseas, thereby benefiting America’s foreign account balance.
In response to recent comments by Trump on Truth Social advocating for foreign aid to be provided only as loans rather than giveaways, the White House countered that such an approach would not be the most suitable path forward, particularly in a nation like war-torn Ukraine.”
“Last month, White House National Security Advisor Jake Sullivan addressed reporters regarding a loan to Ukraine, emphasizing the bipartisan support for both military and economic assistance. Sullivan highlighted that the economic aid being provided is in the form of grants, as burdening Ukraine with significant debt while it is engaged in a life-threatening conflict is not deemed the optimal approach.
In a recent op-ed on US Digital, foreign policy expert and former White House official Michael Allen endorsed Trump’s proposal as ‘workable and novel,’ suggesting that the U.S. should consider his loan plan for assisting Ukraine. Allen referenced the Lend-Lease agreement from World War II as a precedent.
Allen elaborated that Trump’s suggestion entails converting the cost of weapons into a loan to support Ukraine. He noted that Trump’s proposal included a condition where Ukraine would only repay the loan if it achieves substantial economic success.”
“THE DEAL SHOULD BE (CONTINGENT!) THAT THE U.S. IS HELPING YOU, AS A NATION, BUT IF THE COUNTRY WE ARE HELPING EVER TURNS AGAINST US, OR STRIKES IT RICH SOMETIME IN THE FUTURE, THE LOAN WILL BE PAID OFF AND THE MONEY RETURNED TO THE UNITED STATES,” Trump continued in his Truth Social media post last month.
“Drawing parallels to FDR’s Lend-Lease program, Allen argued that Trump’s proposed loan plan for Ukraine has historical precedent.
During a Caribbean cruise after his re-election in 1940, President Roosevelt devised a mechanism allowing the U.S. to lend or lease military equipment and ammunition to nations deemed crucial for U.S. defense. FDR famously likened Lend-Lease to loaning a garden hose to a neighbor whose house was on fire, thereby easing concerns about ‘foreign aid’ by framing the assistance
“FDR had previously outmaneuvered his political opponents by leveraging the transfer of British bases in the Caribbean and western Atlantic in exchange for providing 50 naval destroyers to Britain. Allen highlighted this strategic move as a testament to ‘the art of the deal.’
“FDR’s creative maneuvers in aiding the British serve as a guide,” Allen suggested. “We should embrace such ingenuity, adopt Trump’s proposal, and accept it as a viable solution.”
Trump’s campaign did not respond to US Digital’s request for further comment on the plan to prioritize foreign aid loans if reelected.
Meanwhile, the 45th president has reiterated his stance on the plan while on the campaign trail.
“It’s called a loan. Give them the money, and if they can pay it back, they pay it back. If they can’t pay it back, they don’t have to pay it back because they’ve got some problems. But if they go to another nation, they drop us like a dog, like a female drops a male after a date because he doesn’t like her. If that happens to our country, then very simply we call the loan,” Trump stated during his remarks in South Carolina last month.”