Burbach & Flynn

The US Grain Arsenal: Food as a Weapon

A History of U.S. food aid

• Just after WWI

• Senator Hoover led a massive food relief program to support anticommunist forces and end civil war in Russia (Bolsheviks)

• Food aid became a weapon in the fight against communism after WWII

- United Nations Relief

- Rehabilitation Administration

Public Law 480• Agricultural Trade and Development Act

1954• Food aid was an extension of U.S.

imperialism• $30 billion worth of agricultural commodities

shipped overseas• Intended to develop future commercial

markets for U.S. grain exports and solve increasing U.S. farm surpluses by dumping them overseas

• Over ¾ of commodities were shipped under long-term, low interest credits from Title 1 of PL 480

• Allows foreign governments to import U.S. products for resale in their own countries- does not reach poor or needy

In Bangladesh over 90% of food aid has been in the form Title 1 credits since 1974, government sells the food at subsidized prices through official rationing system -90 percent goes to urban middle class

• Sale of Title I commodities gives funds for recipient government “counterpart funds”

• Economic assistance to its client regimes in third world

• Allies used budgetary support to finance their military expenditures- Food for Peace program

In South Korea, second largest recipient of PL 480 credits, 85% of food aid credits used for this program in the 1960s

-1975: $6 billion of Title I sales proceeds went to military purposes regardless of 1973 congressional ban to use of PL 480 funds

• Title II of the program allowed U.S. government food donations to “friendly” countries through private relief agencies

• Political role of relief agencies reported as “the quiet arm of American diplomacy, living in the shadow between official policy and private charity.”

• U.S. turned loan repayments of local currencies into grants for “common defense” and operations overseas

• U.S. multinationals received PL 480 funds for oversea expansion

Cooley program

• “Cooley program” local currencies were loaned to U.S. companies to set up new subsidiaries in PL 480 countries

• In 17 years of existance, 419 subsidiaries in 31 countries receive Cooley loans

- Bank of America, Ralston Purina, and Cargill Corporation

Developing New Food Markets• First 12 years of PL 480 program ¼ of U.S.

exports were financed by credit terms• By the late 1960s favored recipients of loans

advanced to status of hard-cash commercial buyers-Japan, Taiwan, and Brazil

1969: PL 480 accounted for 15% of agricultural exports then dropped to 4% by 1977

• USDA worked with grain multinationals to develop commercial markets under food aid programs

• U.S. food aid has helped weaken local food production in South Korea, Dominican Republic, India, Bolivia, and Colombia through subsidizing the flooding of PL 480 commodities

• The success of PL 480 in enhancing the dependency of third world countries has expanded U.S. markets and given the U.S. government political leverage

• PL 480 had been fully incorporated into U.S. Foreign Policy arsenal by the 1960s

The Food Aid Weapon• The “food crisis” showed U.S. power behind

the world’s dependence on U.S. grain• The Vietnam war opposition in Congress

made funds difficult for the White House and State Dept to obtain for economic and military aid

• Struggle with foreign policy-> White House wanted to channel U.S. aid through multilateral lending institutions (World Bank) or use food aid program as an extension of political support

• PL 480 provided a cloak for U.S. diplomacy to win support since it was aimed to feed the needy- perceived as more humanitarian than political

• Early 1970s: Foreign policy interests took complete precedence

• Commercial markets growing and grain reserves depleting, PL 480 was no longer used to dispose surpluses

Food Power in Chile

• Food aid played a central role in U.S. foreign policy strategies for Chile.

• 1970: U.S. government launched an economic blockade to oppose potential risk of a socialist regime headed by President Salvador Allende.

• All Title I credits were suspended• Socialist government called for more food• Food imports: doubled in1971 to $261

million,1972 increased to $383 million• Request for U.S. wheat for cash was denied• A military coup supported by U.S.

government overthrew the Allende government in 1973.

• Chile immediately received the largest PL 480 credit for Latin America of $35 million (out of a total of $50 million) to boost the new junta headed by General Augusto Pinochet

• Protests against the Pinochet regime because of the U.S. role in disassembling the Allende government but Congress still wanted to t support the junta

• Instead of the programmed $35 million in 1975, Chile received $52 million in food aid credits (Making the Pinochet regime the 6th largest recipient for the year)

• Agriculture Department’s Commodity Credit gave Chile credit for wheat and corn through the CCC’s Export Credit Sales program

• Steady flow food credits allowed dictatorship to continue by alleviating shortage of foreign exchange

• Saving on food imports left more to spend on military equipment

• Food aid did not alleviate plight of working class after the coup

Majority of Chileans could not afford the food available under Title I

Infant mortality increased (18%) during the first year

Food for War

• “Food for Peace” program was used to subsidize the U.S.- sponsored war to confine communism in SE Asia

1974: Vietnam and Cambodia were allocated ¾ of total U.S. food aid credits through the Nixon administration

> Special treatment where both countries could use all of PL 480 counterpart funds for military purposes instead of being required to repay food aid as of 1971.

Barter Program

• Title III “barter program”Established as a scheme to barter U.S.

surplus agricultural commodities in exchange for strategic materials

By the 1960s used finance overseas operations• Food was sold overseas by exporters then

either sent proceeds to U.S. government agencies or used money overseas on behalf of these agencies

AID used funds to get supplies for its operations in Vietnam

• Antiwar groups -> Congress taking a more critical look at the total foreign package

• Congress amended PL 480 requiring 70% of food aid go to countries on the UN list of countries “most seriously affected” by food shortages (Cambodia and Vietnam were not on the list)

• The White House increased the total PL 480 budget from $1 billion to $1.6 billion, complying with percentage limitations on aid to Indochina without reducing the absolute levels of aid.

The Human Rights Refrain• Concern for human rights violations in the

third world were voiced by Congress and Carter White House

Loophole left in program eventually allowed 83% of all nonfood commodities to be programmed to countries above the poverty line, and 80% of this amount went to two of the State Dept’s favorite dictators

= Park Chung Hee- South Korea

= Ferdinand Marcos- Philippines

1975: Congress decided ¾ of Title I credits go to “poor” countries, defined by World Bank’s poverty line (annual per capita GNP $300)

1997: Congress redrafted PL 480 legislation and allowed “poverty line” to rise with inflation

-> Only 33 countries are above this line ($520 annual per capita GNP)

• Congress added amendment giving the president the right to waive the poverty line restriction for particular countries

• The new law demands that food may not be sent to governments that have violated human rights (declared by special executive committee)

• Congress did not address the contradiction: a government labeled as a human rights violator can receive food aid if it merely promises that the food or proceeds from the food sales will go directly to needy people.

• Title II donations are exempt from the human rights review process since it was defined to contribute to the well-being of the poor

• Human rights provision by the Carter Administration did not alter the political thrust of the food aid program

• Carter administration cut off all food aid to the new communist government in South Vietnam in spite of the rice crop shortage in 1978

New Strategic Priorities• Carter-appointed Special Task Force on PL

480 reported in 1978 that the program serves U.S. interests and listed 8 countries that were estimated to receive food for solely political reasons (half in the Middle East)

Egypt became a favored recipient of U.S. food aid and was extremely dependent on food imports then eventually added to the UN’s most seriously affected list -> influx of PL 480 credits.

• Sadat government is the world’s largest recipient of PL 480 credits, twice as much as Latin America

• Food aid credits to Egypt reflects overall U.S. foreign policy priorities

• South Korea also listed as a purely political recipient of PL 480 credits by Task Force

• Political importance of food credits was heightened when the fall of U.S. client regimes in Southeast Asia made South Korea the linchpin in U.S. strategies for containing communism in Asia

• PL 480 credits were raised with U.S. commitment to modernize South Korean army because Congress wanted to eventually phase out military aid to South Korea

Conclusion• Food aid started as a an extension of U.S.

Imperialism and as a weapon against communism

• The United States should have a humanitarian food aid program to share its agricultural abundance with the world’s poor and needy.

• Distribution of aid to the needy in times of famine must be supported and future attempts to transform U.S. food aid could not be any more successful as in the past.

• Problems are within the fundamental priorities and aims of U.S. foreign policy not the loopholes left in legislation

• As a part of the U.S. foreign policy, food aid will continue to be used for economic and political interests

> supporting dictators, bypassing or weaken popular governments

Rarely means feeding hungry people

• “It is not a change in the food aid program that is required, but rather a fundamental change in the objectives of U.S. foreign policy.”