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When it comes to U.S. aid, some in Latin America fret about the political costs

As the U.S. Agency for International Development plans to distribute $1.8 billion in aid in Latin America and the Caribbean over the next two years, you would expect the region to be lining up.

Instead, some nations are eyeing USAID with suspicion, accusing the 50-year-old agency of playing politics even as it helps the needy. In June, the political council of the eight-nation ALBA bloc of countries, led by Venezuela, asked members to “immediately expel” USAID, accusing it of “destabilizing our legitimate governments.”

In July, Ecuadoran President Rafael Correa, who may run for re-election in February, warned supporters that USAID was fueling the opposition by pumping millions into “democracy strengthening” projects.

Correa said he’s writing up new rules for USAID.

“If they don’t want to follow them, then ‘So long,’” he said. “Go help some other country.”

If Ecuador and the ALBA follow through on the threat it would end a half-century relationship in some countries, said Mark Feierstein, the assistant administrator of USAID’s Latin America and the Caribbean bureau. He said USAID has no covert agenda and has always supported priorities identified by the host countries.

“USAID is very popular within these countries among our beneficiaries and I am confident that will continue to be the case and that we’ll be able to continue our work,” he said.

Since its founding in 1961, the agency always has had the dual role of providing aid and advancing U.S. foreign policy. Beneficiaries generally welcome the agency’s help with poverty alleviation, education and the environment, but other initiatives raise hackles.

In 2002, USAID funded a project in Bolivia designed to support moderate political parties that would counterbalance President Evo Morales’ “radical MAS” party, according to de-classified documents obtained by investigative reporter Jeremy Bigwood. Morales has threatened USAID with expulsion since at least 2006.

In 2009l, USAID subcontractor Allan Gross was arrested in Cuba as he delivered satellite phones and communications equipment to the island’s Jewish community. Havana has said his work was tantamount to spying and part of a U.S. government destabilization campaign.

In Venezuela, USAID earmarked $95.7 million to its “Office of Transition Initiatives” from 2002-2010. OTI’s mission is to provide assistance “targeting key political transition and stabilization needs.” Critics wondered why “political transition” would be needed in a purported democracy. In December 2010, at the behest of Venezuelan President Hugo Chávez, the National Assembly made it illegal for any civil-society organization of a political nature to receive international funding.

While that measure may have been aimed at the agency, it highlights a wider backlash against civil society groups in Latin America and around the globe, many of which rely on international support, like USAID’s, to stay afloat.

A report issued last month by Freedom House and the Connect U.S. Fund, two advocacy groups, said the “coordinated global assault on civil society” was one of the top 10 human rights issues the next U.S. president will have to face.

In Venezuela, the 2010 legislation had a chilling effect, scaring off local funding for civil-society groups, said Ricardo Estévez, director of Sumate, an election watchdog group that has routinely challenged the government. Currently, Sumate is trying to force the courts to recognize that Chávez has been misusing state funds in his Oct. 7 re-election campaign.

Until 2007, Sumate received funding from USAID and the National Endowment for Democracy, but it never amounted to more than 6 percent of the budget, Estévez said. Even so, the government accused Sumate of being a foreign agent and slapped it with a lawsuit.

“We were hounded not only through our finances but through the judicial system,” Estévez said. “The government ended up intimidating our local backers also, so now we can’t even talk about where we get our funding from.”

In Ecuador, Fundamedios has been a thorn in the government’s side, raising the alarm about increasingly restrictive media laws. But it was Fundamedios’ work on a USAID-backed project called “Active Citizenry” that made it a target. The program, which received $1.3 million in 2011, aims to strengthen civil society groups through training and workshops.

Correa has said that such projects are designed to undermine administrations Washington dislikes.

“It’s a recipe that’s been used repeatedly in Latin America against countries with progressive governments,” Correa said, suggesting that USAID-backed programs had helped create the environment for an attempted coup in Venezuela in 2002. “They can’t beat us at the polls so they are trying to beat us with these tricks.”

Fundamedios Director César Ricaurte said there was nothing remotely partisan about the project, “but the government has put together this conspiracy theory to try to attack critical voices that are defending freedom of speech in Ecuador.”

Over the last half-century, USAID has proved to have staying power. More than two months after ALBA members called for its “immediate expulsion” no moves have been made against it. And Dominica now says it never signed the agreement. Ecuador has still not issued its new USAID guidelines. And the agency still has plenty of advocates in the region.

“They’ve been a great help to us and I’m sorry that their help isn’t always valued,” Colombia Foreign Minister María Angela Holguín said recently, amid the USAID backlash.

Feierstein admitted the agency’s strategy may not please everyone, but he said it was necessary.

“We take a holistic approach to development,” he said. “It’s both political and economic development.”