foreign service: see diplomatic service; consular service.

foreign exchange, methods and instruments used to adjust the payment of debts between two nations that employ different currency systems. A nation's balance of payments has an important effect on the exchange rate of its currency. Bills of exchange, drafts, checks, and telegraphic orders are the principal means of payment in international transactions. The rate of exchange is the price in local currency of one unit of foreign currency and is determined by the relative supply and demand of the currencies in the foreign exchange market. Buying or selling foreign currency in order to profit from sudden changes in the rate of exchange is known as arbitrage. The chief demand for foreign exchange within a country comes from importers of foreign goods, purchasers of foreign securities, government agencies purchasing goods and services abroad, and travelers.

foreign aid, economic, military, technical, and financial assistance given on an international, and usually intergovernmental level. U.S. foreign aid programs have included at least three different objectives: rehabilitating the economies of war-devastated countries, strengthening the military defenses of allies and friends of the United States, and promoting economic growth in underdeveloped areas. Aid may be given as a grant, with no repayment obligation, or a loan, and often comes with conditions that require that the recipient nation purchase goods or services with the aid from the donor nation.

During and after World War II

Foreign aid, as an integral part of U.S. foreign policy, began (1941) during World War II with lend-lease. In planning for the postwar world, the United States hoped that after a brief relief program, the international balance would gradually be restored, and long-term reconstruction projects would be financed by loans from the International Bank for Reconstruction and Development (IRBD; also known as the World Bank) and the International Monetary Fund (IMF). Therefore U.S. foreign aid was chiefly in the form of emergency grants without any kind of central organization. Initially, the United States provided a large proportion of the funds of the international cost-sharing organization, the United Nations Relief and Rehabilitation Administration (UNRRA), established in 1943 by the Allied governments to provide a broad range of services to the war-devastated Allies. UNRRA spent $4 billion, but the actual dimensions of postwar reconstruction had been greatly underestimated. Conditions in Western Europe, which, unlike Southern and Eastern Europe, had received little UNRRA aid, became desperate, and in June, 1947, the Marshall Plan was announced by Secretary of State George C. Marshall. Known formally as the European Recovery Program, it distributed (1948-51) over $12 billion through the Organization for European Economic Cooperation (the predecessor of the Organization for Economic Cooperation and Development).

During the Cold War

The Truman Doctrine of the same year provided aid to Greece in its struggle against Communist guerrillas, and to Turkey, which was under pressure from the Soviet Union. Later, with the escalation of the cold war, U.S. foreign aid to Western Europe shifted from economic to military assistance to members of North Atlantic Treaty Organization. Concurrently, the increasing needs of the underdeveloped nations led to President Truman's Point Four program. From the time of the Korean War, defense became the umbrella for most forms of U.S. foreign assistance. The administration of aid was centralized under the Mutual Security Agency, an executive agency in the office of the President. During the early 1950s surplus agricultural commodities, accumulated under domestic price-support programs, became available as an additional source of aid: the Food for Peace program. In 1955 responsibility for foreign aid was returned to the Dept. of State when the International Cooperation Administration was established. Military aid was administered by the Dept. of Defense.

Aid, as administered under Presidents Reagan and G. H. W. Bush, was increasingly used to promote American investment, national interests, and market economies, but its main impetus was to protect other nations from Communist influence. In the early 1950s the Soviet Union began a program of technical and economic aid to the underdeveloped nations. Soviet aid, over $6 billion by 1966, was generally low-interest loans, industrial equipment on credit with technical assistance, and long-term commodity purchase agreements. Begun in 1955, it was discontinued with the collapse of the Soviet Union. Since then, the American rationale for foreign aid has become politically more vulnerable.

In Recent Years

Although military aid continues to be provided, largely on a grant basis, economic development aid is provided increasingly as loans through the Agency for International Development and the Export-Import Bank, which finances the export of U.S. capital goods and agricultural products. A large proportion of U.S. aid goes to Israel, Egypt, and developing countries. In 2000, U.S. foreign aid amounted to $10 billion (less than 0.6% of the federal budget); the share of the gross domestic product (GDP) for foreign aid dropped from 2.75% in 1949 to 0.1% in 2000. In 2004 the United States began the Millennium Challenge aid program, which is intended to target aid toward poorer nations with good governance and open economies; the program places fewer restrictions on how participating nations use the aid.

Many nations in Europe and some in the Middle East and E Asia also have significant aid programs; in the mid and late 1990s, Japan was the world's largest foreign aid donor, followed by United States, France, and Germany. Great Britain, generally on a smaller scale, has provided aid to former colonies. Beginning in 2001, the United States passed Japan as the world's largest donor as a result of Japanese cutbacks in foreign aid. About 15% of foreign aid is provided by international bodies. These include the International Bank for Reconstruction and Development and its affiliates, the International Development Association, and the International Finance Corporation; regional development banks; the European Development Fund; the UN Development Program; and specialized agencies of the United Nations, such as the Food and Agriculture Organization.

foreign agent: see espionage.

Veterans of Foreign Wars (VFW), organization created (1899) at Columbus, Ohio, by veterans of the Spanish-American War. It received a charter from Congress in 1936. The organization later admitted veterans who saw action in subsequent wars and U.S. military expeditions. At the close of World War II, the VFW vastly increased its membership; it now rivals the American Legion in size and influence. The organization's program is devoted to the rehabilitation of disabled veterans, protection of national security through maximum military strength, and promotion of patriotism and community service activity. It has a membership of nearly 2 million (1999).

Foreign Ministers, Council of, organization of the foreign ministers of the World War II Allies—the United States, Great Britain, France, and the USSR—that, in a long series of meetings, attempted to reach political settlements after the war. In accordance with the agreements reached at the Potsdam Conference, the ministers of Great Britain, the USSR, and the United States met in London and then at Moscow in 1945 in efforts to conclude peace treaties with those countries that had aided Germany's aggression.

In the first meeting at London there was a great deal of conflict between the Soviet Union and the United States over the latter's role in the occupation of Japan, and little was accomplished. At the Moscow Conference it was decided to draft peace treaties with Italy, Hungary, Romania, Bulgaria, and Finland and to establish an 11-power Far Eastern Commission and a 4-power Allied Council for Japan. Despite difficulties and protracted quarrels over procedure, the council (to which France was admitted in 1946) reached agreement at the next conference in Paris (1946). The final peace treaties with Italy, Romania, Hungary, Bulgaria, and Finland were drafted, and the remaining difficulties concerning the Free Territory of Trieste were resolved at another meeting in New York (Nov.-Dec., 1946).

In Mar.-Apr., 1947, the foreign ministers met again in Moscow to discuss peace treaties with Germany and Austria, but the only agreement reached was on the formal dissolution of the Land [state] of Prussia (a large part of which had already been annexed by the Soviet Union and Poland). Another attempt to reach agreement on Germany and Austria failed when the foreign ministers met at London (Nov.-Dec., 1947); at this meeting there was a marked deterioration in the relations between the USSR and the other three powers. A new meeting (Sept., 1948) at Paris, regarding the disposition of the former Italian colonies, also reached no conclusions.

The council was revived in May-June, 1949, when the foreign ministers, meeting at Paris, reached an agreement ending the Soviet blockade of Berlin but again failed to agree on German reunification. In Jan.-Feb., 1954, the foreign ministers met in Berlin to discuss German reunification and an Austrian peace treaty. Although this conference ended in deadlock, the ministers agreed to the calling of the Geneva Conference of 1954 to discuss "peaceful settlement of the Korean question." They agreed on an Austrian peace treaty the following year in Vienna. The foreign ministers met during the Geneva Summit Conference of July, 1955, and again in Geneva later in the year. On neither occasion, however, could they reach agreement on the principal topics for discussion—German reunification, European security, and disarmament.

In 1959 tension over Berlin led to another foreign ministers' conference in Geneva. The Western powers insisted that a German peace treaty be signed only after Germany was united through free elections; that the four-power occupation of Berlin be maintained until Berlin again became the capital of a united Germany; and that any European security plan be linked to progress in German reunification. The Soviet Union proposed that West Berlin be transformed into a demilitarized free city; that separate peace treaties be signed with the two German regimes; and that a zone be established in Central Europe within which arms and troops would be limited or banned. After failing to reach any agreement the conference recessed for an indefinite period. In June, 1972, however, the foreign ministers of the four powers did sign a comprehensive agreement on Berlin, worked out over the previous two years. It regularized West Berlin's status and its relationships with East and West Germany and paved the way for East and West German entry into the United Nations and the normalization of relations between the two German states.

Foreign Legion, French volunteer armed force composed chiefly, in its enlisted ranks, of foreigners. Its international character and the tradition of not revealing enlistees' backgrounds have helped to surround the Foreign Legion with an aura of mystery and romance. Although foreigners had served in French armies previously, King Louis Philippe created (1831) this specific foreign legion. Originally intended to pacify Algeria, the legion also was active in the pacification of Morocco and fought in other areas of the French colonial empire and in both world wars. It was later active in the French campaigns in Indochina and Algeria. One regiment of the legion supported Algerian insurgency against the French government (1961) and was rapidly disbanded. The legion was normally stationed in Algeria until 1962, when its headquarters were transferred to S France, near Marseilles. The army's regiments were scattered throughout the world. There have been many other foreign legions; e.g., a British legion participated in the Carlist Wars in Spain, and in the Spanish civil war (1936-39) the International Brigade fought on the Loyalist side.

Area within which goods may be landed, handled, and re-exported freely. The purpose is to remove obstacles to trade and to permit quick turnaround of ships and planes. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to tariffs and customs regulation. Free-trade zones are found around major seaports, international airports, and national frontiers; there are more than 200 such zones in the U.S. alone.

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or diplomatic service

Staff of a state's international-affairs department that represents the state's interests in foreign countries. It fulfills two functions, diplomatic and consular. The standards for foreign-service jobs are similar in most countries. Before the 20th century, wealth, aristocratic standing, and political connections were the chief requirements for high-ranking diplomatic positions. Political appointees still hold the top positions in many foreign missions, but their subordinates generally must demonstrate their education and intellectual ability through a competitive examination. Foreign-service personnel have special legal rights (e.g., they do not have to pay taxes to their host country). Seealso ambassador.

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Study of the relations of states with each other and with international organizations and certain subnational entities (e.g., bureaucracies and political parties). It is related to a number of other academic disciplines, including political science, geography, history, economics, law, sociology, psychology, and philosophy. The field emerged at the beginning of the 20th century largely in the West and particularly in the U.S. as that country grew in power and influence. The study of international relations has always been heavily influenced by normative considerations, such as the goal of reducing armed conflict and increasing international cooperation. At the beginning of the 21st century, research focused on issues such as terrorism, religious and ethnic conflict, the emergence of substate and nonstate entities, the spread of weapons of mass destruction and efforts to counter nuclear proliferation, and the development of international institutions.

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Organized effort to spread the Christian faith. St. Paul evangelized much of Asia Minor and Greece, and the new religion spread rapidly along the trade routes of the Roman Empire. The advance of Christianity slowed with the disintegration of the Roman Empire after AD 500 and the growth of Arab power in the 7th–8th century, but Irish and Anglo-Saxon missionaries continued to spread the faith in western and northern Europe, while missionaries of the Greek church in Constantinople worked in eastern Europe and Russia. Missions to Islamic areas and Asia began in the medieval period, and when Spain, Portugal, and France established overseas empires in the 16th century, the Roman Catholic church sent missionaries to the Americas and the Philippines. A renewed wave of Roman Catholic missionary work in the 19th century focused on Africa and Asia. Protestant churches were slower to undertake foreign missions, but in the 19th and early 20th century there was a great upsurge in Protestant missionary activity. Missionary work continues today, though it is often discouraged by the governments of former European colonies that have won independence.

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Transfer of capital, goods, or services from one country to another. Foreign aid may be given in the form of capital transfers or technical assistance and training for either civilian or military purposes. Its use in the modern era began in the 18th century, when Prussia subsidized some of its allies. After World War II, foreign aid developed into a more sophisticated instrument of foreign policy. International organizations, such as the United Nations Relief and Rehabilitation Administration, were created to provide aid to war-ravaged countries and newly freed colonies. Foreign aid is often given with conditions attached, such as the requirement that all or part of it be used to buy goods from the donor country. Seealso International Monetary Fund; Marshall Plan; World Bank.

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