U.S. Foreign Assistance to Latin America and the Caribbean

Publication Date: January 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Economics

Type:

Abstract:

U.S. foreign assistance programs to developing nations began in earnest after the conclusion of World War II. Trends in U.S. assistance to the region generally reflect the trends and rationales for U.S. foreign aid programs globally. Aid to the region increased during the 1960s with the Alliance for Progress and during the 1980s with aid to Central America. Since 2000, aid levels have again increased, especially in the Andean region as the focus has shifted from Cold War issues to counternarcotics and security assistance. Current aid levels to Latin America and the Caribbean comprise about 9% of the worldwide aid budget, representing a slight increase over levels ten years ago of 8.2%. Aid levels to the region could increase further as new presidential initiatives -- the President's Emergency Plan for AIDS Relief (PEPFAR) and the Millennium Challenge Account -- are implemented.

For FY2005, U.S. assistance to Latin America and the Caribbean was estimated at $1.8 billion, the largest portion of which was allocated to the Andean region: $947 million. Mexico and Central America were slated to receive $311 million, while the Caribbean would receive $370 million, largely reflecting assistance for hurricane and flood damage. Brazil and the Southern Cone of South America were to receive an estimated $52 million. The United States also maintains programs of a regional nature that totaled an estimated $110 million in FY2005.

Aid programs are designed to achieve a variety of goals, from poverty reduction to economic growth. Child Survival and Health (CSH) funds focus on combating infectious diseases and promoting child and maternal health. Development Assistance (DA) promotes sustainable economic growth in key areas such as trade, agriculture, education, the environment, and democracy. For FY2006, the Administration proposed funding for a Transition Initiative (TI) designed to support stabilization efforts in fragile states. The Economic Support Fund (ESF) assists countries of strategic importance to the United States, and funds programs relating to justice sector reforms, local governance, anti-corruption, and respect for human rights. P.L. 480 food assistance is provided to countries facing emergency situations, such as natural disasters. Counternarcotics programs seek to assist countries to reduce drug production, interdict trafficking, and promote alternative crop development. Foreign Military Financing (FMF) provides grants to nations for the purchase of U.S. defense equipment, services and training.

The annual Foreign Operations Appropriations bills have been the vehicles by which Congress provides funding for foreign assistance programs. The FY2006 Foreign Operations Appropriations Act (P.L. 109-102) provided $20.9 billion for the foreign assistance budget worldwide. In the second session of the 109th Congress, Members of Congress will likely continue to be interested in a number of related issues, including the general effectiveness of foreign aid programs, and how best to address the HIV/AIDS problem and poverty issues. Congress may also debate the U.S. role in fighting narcotics trafficking and illegally armed groups in Colombia and stabilizing the situation in Haiti. This report will be updated as events warrant.