U.S. Jobs Shape Condoms' Role in Foreign Aid - New York Times
The New York Times

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October 29, 2006
U.S. Jobs Shape Condoms' Role in Foreign Aid
By
CELIA W. DUGGER

EUFAULA, Alabama - Here in this courtly, antebellum town, Alabama's condom
production has survived an onslaught of Asian competition, thanks to the
patronage
of straitlaced congressmen from this Bible Belt state.

Behind the scenes, the politicians have ensured that companies in Alabama
won federal contracts to make billions of condoms over the years for
AIDS
prevention and family planning programs overseas, though Asian factories
could do the job at less than half the cost.

In recent years, the state's condom manufacturers fell hundreds of millions
of condoms behind on orders, and the federal aid agency began buying them
from
Asia. The use of Asian-made condoms has contributed to layoffs that are
coming next month.

But Senator Jeff Sessions, Republican of Alabama, has quietly pressed to
maintain the unqualified priority for American-made condoms and is likely to
prevail
if the past is any guide.

"What's wrong with helping the American worker at the same time we are
helping people around the world?" asked the senator's spokesman, Michael
Brumas.

That question goes to the heart of an intensifying debate among wealthy
nations about to what degree foreign aid is about saving jobs at home or
lives abroad.

Britain, Ireland and Norway have all sought to make aid more cost effective
by opening contracts in their programs to fight global poverty to
international
competition. The United States, meanwhile, continues to restrict bidding on
billions of dollars worth of business to companies operating in America, and
not just those that make condoms.

The wheat to feed the starving must be grown in United States and shipped to
Africa, enriching agribusiness giants like Archer Daniels Midland and
Cargill.
The American consulting firms that carry out antipoverty programs abroad -
dubbed beltway bandits by critics - do work that some advocates say local
groups
in developing countries could often manage at far less cost.

The history of the federal government's condom purchases embodies the
tradeoffs that characterize foreign aid American-style. Alabama's
congressmen have
long preserved several hundred factory jobs here by insisting that the
United States
Agency for International Development
buy condoms made here, though, probably in a nod to their conservative
constituencies, most have typically done so discreetly.

Those who favor tying aid to domestic interests say that it not only
preserves jobs and supports American companies, but helps ensure broad
political support
for foreign aid, which is not always popular.

On the other hand, skepticism of foreign aid is frequently rooted in the
perception that the money is not well spent. Blame often falls on corrupt
leaders
in poor countries, but aid from rich nations with restrictions requiring it
to be spent in the donor country can also reduce effectiveness.

The United States government, the world's largest donor of condoms, has
bought more than nine billion condoms over the past two decades. Under
President
Bush's global AIDS plan, which dedicates billions of dollars to fight the
epidemic, a third of the money for prevention must go to promoting
abstinence.
But that leaves two-thirds for other programs, so the federal government's
distribution of condoms has risen, to over 400 million a year.

Over the years, Usaid could have afforded even more condoms - among the most
effective methods for slowing the spread of AIDS - if it had it bought them
from the lowest bidders on the world market, as have the
United Nations Population Fund
and many other donors.

Randall L. Tobias, who heads Usaid, declined through a spokesman to be
interviewed on this topic. His predecessor, Andrew Natsios, sought to weaken
the
hold of what he sometimes called a cartel of domestic interest groups over
foreign aid. He tried, for example, to persuade Congress to allow the
purchase
of some African food to feed Africa's hungry. Congress killed that proposal
last year and again this year.

Hilary Benn, Britain's secretary of state for international development,
said in an interview that in 2001 his country untied its aid from
requirements
that only British firms could bid for international antipoverty work.

"If you untie aid, it's 100 percent clear you're giving aid to reduce
poverty and not to benefit your own country's commercial interests," he
said.

In recent years, most of the low-end condom business has moved to Asia,
including Australia-based Ansell, which used to have plants in Alabama.
American
makers cannot compete with Asia on price - unless they have the federal
contract.

The last American factory making condoms for Usaid sits anonymously in a
pine-shaded industrial park here in Eufaula. Inside a modern, low-slung
building
owned by Alatech Healthcare, ingenious contraptions almost as long as a
football field repeatedly dip 16,000 phallic-shaped bulbs into vats of
latex, with
the capacity to turn out a billion condoms a year.

The equation of need is never straightforward. Africa's need to forestall
its slow-motion catastrophe of AIDS deaths is vast. But there is need here,
too.

Most of the 260 people employed at this factory and the company's packaging
plant in Slocomb are women, some the children of sharecroppers and textile
factory
workers, many of them struggling to support families on $7 to $8 an hour.

The most vulnerable among them - single mothers and older women with scant
education - are the most fearful of foreign competition. All feel the
looming
threat.

"It's cheaper, yeah," said Lisa Jackson, 42, a worker in the packaging
plant. "But we Americans should have first choice. We need our jobs to stay
in America.
We got to feed our families. I just wish it had never come to sending
manufacturing jobs overseas."

From 2003 to 2005, Alatech and one other company making condoms for Usaid
fell behind on their orders, agency officials said. Last year, the other
company
went bankrupt. So Usaid ordered condoms from Asia, the first of which were
shipped last year. With only a single American company still in line for the
federal contract, agency officials are wary of ruling out Asian suppliers.

At such moments in the past, Alabama's politicians have come to the rescue
of the state's condom industry. This time was no exception.

Senator
Richard C. Shelby,
a Republican
on the Appropriations Committee, had a provision tucked into the 2004
budget bill requiring that Usaid buy only American-made condoms to the
extent possible,
given cost and availability. His spokeswoman, Kate Boyd, said the agency did
not tell him it was worried about the relative cost of American and
Asian-made
condoms.

Senator Sessions wrote Usaid a letter last year saying it should purchase
condoms from foreign producers only after it had bought all the condoms
American
companies could make, noting it was "extremely important to jobs in my
state."

Usaid assured the senator in writing that it "remains committed to
prioritizing domestic suppliers."

On the strength of that, Alatech bought the more modern Eufaula plant from
its bankrupt rival. Without the government contract, the company's
president,
Larry Povlacs, said, Alatech would go out of business.

In interviews, agency officials were noncommittal about whether they would
halt all purchases in Asia. Condoms made there cost around 2 cents each,
opposed
to about 5 cents for those made here.

"At the end of the day, it's all a political process," Bob Lester, who
recently retired after 31 years as a lawyer at Usaid, said of such
decisions. "The
foreign aid program has very few rabbis. Why make enemies when you don't
have to?"

Duff Gillespie, a retired senior Usaid official who is now a professor at
the Johns Hopkins School of Public Health, said that over the years
officials
at Usaid raised the prospect of foreign competition to tamp down what he
called "the greed factor" of Alabama condom manufacturers.

But whenever the staff pushed to buy in Asia, Alabama politicians pushed
right back.

During the Reagan years, the offices of two Alabamans, Representative
William Dickinson, a Republican, and Senator Howell Heflin, a Democrat,
caught wind
of one such move. Mike House, chief of staff to Senator Heflin, recalled
being tipped off by Mr. Dickinson's chief of staff.

"He says, 'Well, A.I.D. is going to buy condoms from Korea,' " Mr. House
recalled. " 'The reason is they can get three condoms for the price of one
that
they're paying us.' " Mr. House said he asked in amazement, "You mean we're
making rubbers in Alabama?"

The congressmen's staffs threatened to introduce amendments to require that
condoms be made in America. The agency backed off.

Further attempts to open up bidding proved fruitless. Representative Jim
McDermott, a Democrat from Washington State, had seen the devastation of
AIDS firsthand
in the 1980s as a State Department medical officer in Africa. But he said he
could not break what he called the "stranglehold" of Alabama congressmen on
the condom rules.

In the mid-to-late 1990s, Representative Sonny Callahan, a Republican from
Alabama, served as chairman of the Appropriations subcommittee that shaped
Usaid's
budget. Brian Atwood, who headed Usaid in those years, said no administrator
"in his right mind" would have tried to cut Alabama out of the condom
contract
at a time when many Republicans were deeply hostile to foreign aid.

Then in 2001, after decades of negotiation, the United States and other
wealthy donor nations reached a nonbinding agreement to open at least some
foreign
aid contracts to all qualified bidders. Included were those for commodities
bound for the world's poorest nations.

Usaid decided the agreement did not apply to condoms since some went to more
advanced developing countries. Alabama's manufacturers kept the condom
business
once again.

William Nicol, who heads the poverty reduction division of the Development
Assistance Committee at the
Organization for Economic Cooperation and Development
, a group of economically advanced countries, scoffed at Usaid's
interpretation. "That's rubbish," he said in a telephone interview.

The condom companies' inability in recent years to fulfill Usaid's orders
accomplished what the gentleman's agreement did not: the entry of Asian
competitors.

Usaid has asked Alatech to make 201 million condoms next year, less than
half of this year's order, and ordered another 100 million made in Korea and
China.

Come Nov. 15, Alatech will lay off more than half its work force. Those jobs
fell victim to Usaid's smaller orders for condoms, foreign competition and
automation.

The reactions of these workers ranged from philosophical to panicked.

One, Garry Appling, a 41-year-old single mother, has worked before as a
$6-an-hour cashier at Krystal, the fast food restaurant, and another at
$7.15 an
hour in a chicken processing plant. She said her 10-year-old daughter,
Anterria, worries that she will have to go back to the chicken plant, a
place so
cold and wet Ms. Appling often fell ill.

But even facing her own impending job loss, Ms. Appling took a moment to
empathize with the women making condoms on the other side of the world.

"We need a job - I guess they do, too," she said, during a brief pause from
feeding condoms into an intricate, rotating, whooshing machine that tested
them
for holes. "It's sad.

"At the same time, the United States can't just keep helping overseas. They've
got to help us, too."

Copyright 2006
The New York Times Company

Postedby Miriam V.