NEW YORK — Recent reports indicate a massive diversion of funds from international donors providing aid to Bosnia. According to officials from the antifraud unit set up by the Office of the High Rep- resentative, the international agency responsible for carrying out the civilian aspects of the Dayton peace accord, hundreds of thousands of dollars have disappeared from public funds or have been stolen from international aid projects directed to Bosnia. Those responsible are reportedly the Muslim, Croatian and Serbian leaders who keep Bosnia partitioned into three ethnic enclaves.

At the same time, in the Central American nation of El Salvador, a fiscal court is investigating the diversion of funds intended for victims of Hurricane Mitch but which were reportedly used for political purposes.

These cases add to existing evidence that unless there is a serious rethinking of how international aid is implemented, funds may continue to be diverted for spurious purposes to the detriment of those they are truly meant to help.

These new reports of corruption at the highest levels of government also confirm my observation of many other international aid projects worldwide. In the course of health-related missions in over 40 countries, I have seen the failure of several projects due to lack of monitoring by international donors. That is why the responsibility for these failures falls to a large extent not only on those who misuse the funds but on the international donors themselves.

These considerations are particularly valid when assessing foreign aid to or plans for debt reduction for heavily indebted poor countries. U.S. President Bill Clinton has recently said that increasing foreign aid would help prevent wars and has pointed out that foreign aid, which amounts to less than 1 percent of the U.S. federal budget, has been declining since 1985. U.S. foreign-aid allocations are among the lowest of any industrialized country, calculated on a per capita basis. Although Clinton is right to confirm the need to increase foreign-aid spending, it must be done properly if it is to help those who most need it. In the case of the United States, a step in the right direction would be to pay off its outstanding debt to the United Nations.

Under the recently issued Cologne Initiative, the G8 group of industrialized countries agreed to provide more debt relief, and more quickly, to poor countries. It has been estimated that over the past 50 years industrialized nations have given approximately $1 trillion in aid to poor countries. However, that enormous amount has neither improved the quality of life for its intended beneficiaries nor led to faster economic growth in the recipient countries. Something is clearly wrong.

There are, in fact, several things wrong. What, then, are the basic conditions that must be met if foreign aid is to be effective? For a start, it should be genuinely intended as a motor of development in recipient countries and not as a source of political or religious patronage. Funds should aim to help those most in need in the population and not stop with the political and economic elites of the countries involved. Aid should be aimed at countries with basically strong institutions and a willingness to adopt sound economic policies. It should follow the identification of either government or nongovernment groups with both expertise and a record of success in carrying out projects. Rather than supporting pharaonic projects, whose failure could have devastating consequences, aid should support small projects that are easier to monitor and evaluate. And it should be largely geared to training and empowering disadvantaged groups. These measures cannot ensure the success of foreign aid, but they are basic conditions without which no aid is likely to succeed.

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