‘Have-Not’ Countries?

August 4, 1958

Surely the overturn in Iraq has supplied one more lesson in the folly of foreign aid. The economic and military aid that we poured into Iraq has not only gone down the drain, but we shall be lucky if these resources are not ultimately used against us.

Once more it has been proved that our foreign aid does not buy allies or even friendship. Once more it has been proved that it does not turn a country “away from the Communist camp.” In a book I wrote eleven years ago, Will Dollars Save the World? I pointed out that “the comparatively easy decision to give more of the American taxpayer’s money away cannot be regarded as a substitute for the hard political and diplomatic decisions that any serious program of countering Russian Communistic aggression must involve.”

The political folly of the foreign-aid program is exceeded only by its economic folly. One of its economic assumptions is that foreign aid will “raise living standards” and so “discourage Communism.” The statistical evidence fails to show that any recent rise in living standards has discouraged Communism. Nor is there any convincing evidence that the rise in living standards actually achieved in Europe or the Middle East in the last decade has been mainly the result of our foreign aid. On the contrary, whatever rise in living standards has occurred in the Middle East in the last ten to twenty years has been mainly brought about by the exploitation of oil.

WHERE THE OIL IS

The tremendous significance of this has been almost wholly lost on our own statesmen and on our socialistic “liberals.” One of their favorite themes in the last decade is that this country is rich because it has been blessed far beyond others with “natural resources,” whereas the “underdeveloped” countries are poor because nature has given them no natural resources. So we, the Have nation, must give to the Have-Not nations to satisfy their “legitimate aspirations.”

Turning to reality, let us look at one of the most vital of all national resources for modern industry, wealth, warfare. Last year the Middle East produced 23 percent of the oil out put of the free world. True, great as this is, it was only about half the oil brought to the surface in the United States, which accounted for 47 percent of the free-world total. But when we turn from current production to oil reserves, we get the reverse of this picture. According to the estimates of The Oil & Gas Journal, Middle Eastern lands contain proven oil reserves totaling 170 billion barrels, or 71 percent of the West’s still untapped crude petroleum, compared with known U.S. reserves of only 33 billion barrels, or only 14 percent of the free world’s holdings. The Middle East, in other words, has more than five times the known oil reserves of the United States.

RESULT OF CAPITALISM

Which then are the Have, which the Have-Not nations? In proportion to its area and population, the Middle East may be more richly endowed than ourselves, not only with oil, but with total natural resources. Some day, instead of giving aid to the Middle East, we may be asking for it.

Why, it may be asked, if the Middle East is so richly endowed, is its general standard of living so far below our own? I suggest that the reason is because America has followed the way of private competitive enterprise, the way of freedom and capitalism, whereas in the Middle East, generally speaking, private property and private capital, foreign or domestic, has never been safe from burdensome regulations or taxes, seizure, or socialism. Even the oil development that the Middle East has had has been almost wholly achieved through discovery and exploitation by American or British private enterprise.

But none of these facts has seemed to make the slightest impression on the semisocialist ideology of our Washington bureaucrats, whose cure for every crisis in foreign relations is still bigger American handouts. It is not easy to see how we can extricate ourselves gracefully, and without losing face, from our present awkward involvement in the Middle East imbroglio. But it is still not too late to reappraise some of the preconceptions and policies that chronically lead to such involvements.