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Still, the U.S. should recommit itself to foreign assistance on a realistic basis so that aid will 1) regain the political support it needs in the U.S., and 2) be effective overseas. In the 1950s and '60s, U.S. aid was largely a matter of bilateral, oneway gifts. Such assistance has too often proved harmful to the LDCs: it discourages economic innovation and national self-esteem while feeding corruption and resentment on the part of the recipient. Some outright government-to-government grant assistance will still be necessary. The real emphasis, however, should now be on private-sector investment by multinational corporations and on highly conditional, firmly supervised loans, channeled through such international financial institutions as the World Bank, the International Monetary Fund and various regional development banks.
Reagan and his advisers seem to favor bilateral deals, with the U.S. lending directly to a poor country. Such loans not only would be easier to monitor but they also could serve as rewards for political behavior that the U.S. considers friendly. But precisely because such bilateral deals offer an opportunity for obvious political manipulation, they are almost sure to be resisted not only by Third World countries but also by America's principal economic partners. The West, to use its wealth effectively, needs a common investment strategy. Hence a more prudent course would be to strengthen internal tional financial institutions. That means using America's still dom inant position on the governing boards of those bodies to improve their ability to tie — and occasion ally yank — the economic strings that must be attached to loans and aid programs.
It also means bringing con certed pressure on pro-Western members of OPEC, to recycle more of their petrodollars and petro-yen through the multilateral institu tions. Venezuela, a founding member of OPEC, has been assist ing the poorer nations of the Car ibbean basin, and Saudi Arabia spends about 3% of its G.N.P. on aid programs for such relatively poor Islamic states as Pakistan, Syria and Jordan. But Saudi Ara bia's vast wealth represents a global problem and not just a re gional one, since it has accumulat ed that wealth partly at the ex pense of oil-importing poor countries around the world.
Therefore, the Saudis share the responsibility of major industri alized countries to help the international financial institutions as sist the LDCs. In the long run it is in the interests of the West and its wealthy friends in the Third World to wean the poorer na tions from their current paradoxical addiction: socialist nostrums at home financed by capitalist largesse from abroad.
I n the perennially troublesome and potentially explosive Middle East, the focus of U.S. diplomacy should shift to Jordan.
The American foreign policy dilemma is a familiar one: how to maintain the U.S. commitment to Israel's existence within secure,