Ammon News - AMMONNEWS - By PhD Researcher Hanin Kreishan - The American economy is one of the strongest economic systems in the whole world, based on the strongest world currency, the “U.S. Dollar”, which impacts the global macroeconomic system. According to Linda S, Goldberg in the article “The Federal Reserve Bank NY 2010”, the share of U.S. dollar bills estimated to be held outside the United States is substantial, roughly $580 billion in physical U.S. dollars. Besides being more than one third of the world's output, measured by Gross Domestic Product (GDP) held by countries that have pegged their currencies to the dollar. The U.S. Dollar rules the foreign exchange market, 85% of FX (FOREX) trading is in the U.S. Dollar. Also, 39% of the world’s debt is issued in U.S. Dollar currency. Therefore, any political economic situation in the U.S. will have important implications for the rest of the world and vice-versa.
U.S. Agency for International Development (USAID) is defined in the financial dictionary as; “An agency of the U.S. federal government that provides foreign aid and financial assistance to other countries. It helps after natural disasters and conducts anti-poverty programs in various parts of the world. It was established in 1961.”
President Donald Trump, the 45th President of the U.S.A., in his first 100 days as President accomplished many of his plans “to make America great again” concentrating on the U.S. economy. President Trump’s Administration released a budget proposal for 2018 fiscal year in March that cuts assistance to developing countries and integrates the State Department with USAID, according to an internal budget document and sources as decreasing aid to developing countries by over one third. And in the detailed fifteen pages of the State Department budget document obtained by Foreign Policy, the reform includes re-path funding from development assistance into a program that is tied closely to national security objectives.
April 28, 2017, Peter Ford wrote in The Christian Science Monitor-Paris; “Some people in the Trump administration see foreign aid as a charity giveaway; they think we get nothing from it and that it is a waste of money,” says one former State Department official who once worked on aid issues. “Some of it is, but it doesn’t have to be; we can make better use of resources if we align them with US strategic interests.”
On Thursday, Mar 16, 2017 Reuters news agency’s Joshua Roberts published the speech of the Acting State Department Spokesperson Mark Toner during a news briefing at the State Department in Washington, U.S. He stated that President Donald Trump's proposed budget for the 2018 fiscal year would not decrease U.S. aid to Israel but that assistance levels to other nations, including Egypt and Jordan, were still being evaluated;
"Our assistance to Israel is ... guaranteed and that reflects obviously our strong commitment to one of our strongest partners and allies,"
"With respect to other assistance levels, foreign military assistance levels, those are still being evaluated and decisions are going to be made going forward,"
Toner added “noting that treaty obligations would be a factor. The United States provides assistance to Jordan and Egypt as part of their peace treaties with Israel.”
Peter Ford talked about “a leaked State Department budget document lays out proposals for a 30.8 percent cut in development aid and plans to sharply cut back USAID, America’s premier foreign aid agency, by closing many of its projects.”
This would huge challenges for the developing countries which have made major progress based on aids within recent decades. The World Bank reports that the percentage of the developing world’s citizens who were living on less than $1.90 a day has fallen from 42% to 11% since 1981, and the child mortality rate decreased by half within the past 25 years, also the ratio of low and the middle income countries estimated “not free” increased from nearly one fifth to under one third. Accordingly, it will be hard to measure the influence of the aids due to trade and other factors. It will be even harder if the State Department’s Policy, Planning, and Learning office, which monitors and evaluates aid projects so as to make aid more effective, loses 44.2 percent of its funding, as planned according to the budget document.
According to Peter Ford, “the planned cuts would not make much difference to the nation’s overall budget for fiscal year 2018, which Congress must approve by Oct. 31. Foreign assistance – including military aid - makes up just 1 percent of the total US budget, and the cuts would save about 0.15 percent of overall US government spending.”
“They would be felt much more keenly elsewhere in the world, though. Sierra Leone, for example, the 171st poorest country in the world out of 187 countries, according to the IMF, and still recovering from the Ebola outbreak, has been struck off the list of US aid recipients altogether.”
“There is no rhyme or reason to the cuts,” says Tom Hart, director of “One,” a Washington-based campaign group focused on eradicating extreme poverty. At a time when Yemen, Somalia, South Sudan, and Nigeria are on the brink of famine, according to UN warnings, the budget would take 68 percent out of the budget of USAID’s food security bureau, he points out.”
On Thursday, April 27, 2017, Egyptian news “El7ekaya”Mohammad Al-Sayed published “Opposition in Congress to Cut Economic Aids to Egypt and Jordan”. He argued that the Trump Administration’s proposal reducing the economic aids to Egypt to $75 million instead of $142.7 million, which is a decrease of approximately 47.4%, created objections and concern on the U.S. Congress floor. It also confirmed that the United States compensation to Egypt by maintaining the current levels of military aid, but the proposed reduction would increase the difficulties facing Egypt and Jordan economically.
On another hand, Thursday, April 27, 2017, Alghad Jordanian Local News, Samah Bibars wrote “Excluding Jordan from the Reduction of USAID”. The U.S. economic aid will be taken into consideration for continuity to Jordanian economic support without reductions, mainly for 2017 and 2018, due to the "geopolitical" role of Jordan in the region, as well as the Jordanian role in the war against "terrorism". Move up here President Trump plans to cut Jordan's foreign economic aid from $ 812 million to $ 636 million, approximately $ 176 million, almost 22%.The same documents indicate that Trump's budget proposal excludes military aid to Jordan from reduction.
During King Abdullah’s visit to America last February, U.S. emphasized providing additional financial aid to Jordan in 2017, adding to the regular aid set by a Memorandum of Understanding (MOU) of $ 1 billion. The United States is committed to providing Jordan with $ 1 billion in annual aid in an earlier MOU that began in 2015 and ends this year. The United States has provided additional assistance of $ 273 million in 2015 and an additional $ 250 million in 2016.
The United States has committed itself to Jordan for a period of 5 years, during which it pledged $ 660 million annually from 2009 fiscal year to 2014 fiscal year. Recently, Jordan has requested a renewal of the MOU to obtain fixed aid over the next five years (2018-2022).
According to an official U.S. report for USAID in 2014, Jordan has received $ 774.6 million in additional military assistance since fiscal year 2014 and has received as the fourth largest country economic and military aid from USAID. It should be pointed out that Israel and Egypt topped the list of countries that received USAID, showing that Egypt and Israel received 75% of US military aid in 2014, which amounted to 5.9 billion dollars. Iraq came in third, and then Jordan with an estimated $ 1 billion. U.S. President Donald Trump’s Administration reduced aid to Egypt by approximately 50%, in return for increased aid to the West Bank and Gaza.
Finally, a question needs to be raised as to which extent the U.S. economic aid reduction plan will influence the economic sectors for the developing countries; economic growth, education and trainings, population, health and nature, environment sustainability, information technology, and humanitarian assistance?
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