By ignoring White House pleas for more equitable distribution of $4.9 billion appropriated for country-to-country foreign aid in fiscal 1988, Congress has severely restricted the impact of such aid on the Third World and other strategically important areas, administration officials said yesterday.
Instead of targeting the funds for several nations where the United States has policy interests, Congress has reserved almost 75 percent of the money for a handful of nations, said officials of the State Department and Agency for International Development (AID).
On Dec. 22, in the final days of the session, Congress bowed to various political pressures in passing a catchall spending bill that included the foreign assistance appropriation.
While it met many of the administration's key requests, the overall effect, as one AID official put it, was to "hurt the aid program horribly by taking away almost all our flexibility to use aid in the way that best advances U.S. interests."
As part of the compromise that produced the appropriations, Congress did not cut foreign aid, as the administration had feared. In fact, the final funding level is roughly equivalent to what the administration wanted.
However, to a greater degree than ever, Congress resorted to "earmarking" funds normally available to AID to help countries with development projects and balancing payments.
In earmarking aid, Congress mandates allocation of fixed amounts to specific countries or programs, thereby superseding the administration's discretionary authority to make changes in distribution.
As a result, AID officials said, 72 percent of bilateral economic aid, excluding foodstuffs supplied to various countries under the Food for Peace program, has been earmarked for such countries as Israel, Egypt and the Philippines, which command strong political support on Capitol Hill.
Such aid also is earmarked for Pakistan and Central America, which are at the center of high-priority foreign policy issues.
Members of Congress with special constituencies also succeeded in having smaller amounts earmarked for countries such as Ireland and causes such as Poland's Solidarity movement and the Afghan resistance. While individual amounts are relatively small, they total about $250 million.
Administration officials have conceded that most earmarked funds would have been used for purposes dictated by Congress.
Because virtually all of the administration's discretion to shift some of the money has been eliminated, they said, it is impossible for the United States to meet other, tentative, high-priority commitments involving programs that the administration thinks are important to maintain in other countries.
"The reality is that we're not going to be able to do many things we wanted to do," said Alan Woods, who became AID administrator last month. "There isn't room in the non-earmarked part of the budget to satisfy all our priorities and obligations. It means that, in some cases, we'll be able to make only token gestures. And in others, we won't be able to do anything at all."
Among potentially serious consequences, according to AID and State Department officials, is possible new trouble in negotiations about continued maintenance of militarily important U.S. bases in three North Atlantic Treaty Organization countries -- Turkey, Spain and Portugal -- and the use of Omani facilities to support Persian Gulf operations.
The base agreements, particularly in Europe, have always been politically sensitive issues for the host governments, and past agreements were dependent on the United States providing sizable economic and military aid.
Under conditions imposed by Congress, the officials said, the United States could not provide economic aid equivalent to what the three NATO allies have come to expect.
The result, the officials stressed, could involve risk to continued operation of dozens of air bases, ports, depots and communications facilities used by U.S. forces since World War II.
Also of great concern, the officials said, is the long-range effect on many Third World nations, particularly in Latin America.
There, the administration has been using aid resources as a spur for governments to restructure economies in ways that could ease the poverty, inflation and social injustice that make them potential flash points for political instability.
As an example, AID officials cited the Dominican Republic, where a bloody civil war 22 years ago resulted in massive U.S. military intervention. More recently, the United States has invested millions of dollars in aid to help Dominican governments move away from their historical dependence on growing and refining sugar and diversify.
Starting last year, when fiscal austerity caused Congress to start whittling at foreign aid, funds for the Dominican Republic were cut drastically.
This year, AID officials said, the earmarking process means that the Dominican Republic is one of several unprotected countries that could receive no assistance, perhaps causing great harm to the island nation's economy and wasting years of U.S. aid investment there.
For fiscal 1988, Congress provided $6.2 billion for the three types of programs administered by AID. Of that, $1.3 billion was for Food for Peace.
The rest, which covered the money funds available to AID, was $1.7 billion for development assistance, restricted to programs that meet "basic human needs" in poorer countries, and $3.2 billion for the Emergency Support Fund (ESF), the largest account available to AID and the one that traditionally provides its greatest flexibility.
Of the $3.2 billion voted for ESF, Congress earmarked $1.2 billion for Israel, $815 million for Egypt, $220 million for Pakistan, $174 million for four Central American allies and various smaller special-interest countries and causes whose earmarked funds totaled about $250 million.
The net effect, AID officials said, left $99 million of the $3.2 billion for discretionary allocation. That, they added, represents the total available under ESF for programs in the South Pacific, Bolivia, the Dominican Republic, Ecuador, Haiti, Jamaica, Peru, Lebanon, Turkey, Portugal, Spain, Oman, Thailand and Cambodia.
Yet, in negotiations with only the NATO base-rights allies, the United States had said it would make its "best efforts" to obtain fiscal 1988 aid levels of $125 million for Turkey, $80 million for Portugal and $12 million for Spain.
AID and State Department officials said that they are discussing how best to allocate the $99 million for these obligations and that, while decisions have not been made, the base-rights countries will probably receive most of it.