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Question of the Week: U.S. Foreign Aid and the Election

by Development Channel Staff
November 16, 2012

U.S. Secretary of State Hillary Clinton speaks during the Fourth High Level Forum on Aid Effectiveness in Busan, Korea on November 30, 2011 (Saul Loeb/Courtesy Reuters). U.S. Secretary of State Hillary Clinton speaks during the Fourth High Level Forum on Aid Effectiveness in Busan, Korea on November 30, 2011 (Saul Loeb/Courtesy Reuters).

What does the election mean for U.S. foreign aid?

Question of the Week posts review important questions and controversies in global development by providing background information and links to a full spectrum of analysis and opinion. Today’s post explores the prospects for U.S. foreign aid in President Obama’s second term.

With President Barack Obama reelected for a second term, there is a presumption of continuity for the administration’s foreign assistance policies and programs. For initiatives that have only recently gotten underway—the structural reorganization of parts of USAID, for instance—there are now four more years to see things through. However, the administration faces an evolving environment for foreign assistance and development, with factors ranging from the likelihood of a new Secretary of State who will want to put his or her mark on the development agenda, to Congressional calls for significant cuts in spending. The rise of aid from the BRICs and others raises new questions about the U.S. development approach, as do the changing characteristics of poverty itself: most people who live on less than $2 a day now reside in middle-income countries. Amid this backdrop, the Development Channel looks at continuity and change in five areas of U.S. policy.

The Foreign Aid Budget

While some twenty-one U.S. government agencies—ranging from the Department of Agriculture to the Department of Justice—are involved in carrying out foreign assistance, the major ones are the State Department, USAID, and the Millennium Challenge Corporation. Together, these agencies take up about one percent of President Obama’s requested FY 2013 federal budget, with a joint total of approximately $52.5 billion. Depending on exactly what is counted, the request for the State Department and USAID is slightly higher than the 2012 level, while the request for the Millennium Challenge Corporation remains the same.

Foreign assistance, a perennial political target, will face even greater resistance than usual as discussions over America’s debt heat up in the coming months and years. “While the president’s 2013 budget shows a slight increase from 2012 levels,  foreign affairs spending will continue to be under a high degree of scrutiny going  forward and will often be pitted against cuts in domestic programs,” argues a report from the Center for Global Development. Turbulence and uncertainty in transitioning countries in the Middle East has also caused some in Congress to push for cuts to foreign assistance. Aid to Egypt and Libya has recently faced opposition for reasons including the attack on the U.S. consulate in Benghazi and the breach of the U.S. embassy in Egypt, Egypt’s arrest of American NGO workers, and more.

Moreover, just as a drawdown of U.S. efforts in Iraq is resulting in decreased foreign assistance funding there—slightly over $1 billion in FY 2010 compared to almost $8 billion in FY 2005, for example—a decline in spending seems likely for Afghanistan in the coming years. Foreign assistance to Afghanistan in FY 2010 was over $4.6 billion, more than 10 percent of total foreign assistance.

Other foreign aid challenges are even more immediate. If sequestration occurs as part of the “fiscal cliff,” budget cuts will also affect foreign assistance. The Office of Management and Budget report on the sequestration estimates that the Millennium Challenge Corporation would lose about $74 million while USAID would lose about $469 million. This loss would affect development assistance, disaster relief, and operating expenses, for example.

Administrative Reform of U.S. Foreign Assistance Agencies

Reform of the foreign assistance agencies is a major component of the Obama administration’s foreign assistance agenda.  In 2009, Secretary Clinton initiated the Quadrennial Diplomacy and Development Review (QDDR), a State Department and USAID initiative to better coordinate the work between agencies, integrate diplomacy and development into the national security agenda, and improve organizational and administrative functioning.

The QDDR aims to “reestablish USAID as the world’s premier development agency” by measures such as bolstering strategic planning, attracting certain kinds of expertise, and moving the organization away from its reliance on U.S.-based contractors. One product of the QDDR process is USAID Forward, a “reform agenda” focused on enhancing partnerships with local organizations, promoting innovation, and “strengthening [USAID’s] capacity to deliver results,” including by boosting staff. Another four years under the same president will likely give these nascent reforms more time to evolve.

Commentary on the QDDR and USAID Forward has been mixed. Some observers have criticized the process for outlining a weak role for the administrator of USAID and for failing to address inter-departmental coordination in policy toward fragile states. Others have praised the lifting of the requirement that USAID buy aid products from American companies. Still others (including CFR’s Laurie Garrett) have wondered about the administration’s reorganization of global health programs, contrary to the QDDR’s recommendations.

Open Data Initiatives

The Obama administration has placed an enhanced emphasis on aid transparency, another priority identified in the QDDR, pledging in 2010 to develop an online platform accessible to the public that shows data on U.S. foreign assistance spending by agency, by country, and by other categories. So far, just a few agencies have provided data to the Foreign Assistance Dashboard, but over twenty are due to participate eventually. Experts like the Center for Global Development’s Sarah Jane Staats note the potential tension between open data and “ongoing government bureaucracy concerns about security, data consistency, and control over interpretation.” However, Staats and others also point to initial positive consequences of the data release, including USAID’s success in crowdsourcing a data processing task at no cost.

Trade and the U.S. Relationship with Africa

Many analysts have complained that President Obama has ignored sub-Saharan Africa, which he visited just once during his first term. Mwangi Kimyeni of the Brookings Institution, for example, praises President Obama’s launch of Feed the Future and the Global Climate Change Initiative, but says the president has broken little new ground.

One area where a second term could have a bigger impact on Africa is trade. Last June the administration released the Strategy for Sub-Saharan Africa, which, as blogger Tom Murphy suggests, emphasizes “trade over aid.” John Norris of the Center for American Progress, who described the strategy as “sensible and bland,” also makes the point  that President Obama’s earlier “request for expedited authority from Congress to consolidate and reform the six U.S. trade promotion agencies and create a one-stop-shop for American businesses looking to do more business abroad probably would have more impact on Africa than any other region.” But, Norris, says, the request is mired in partisan conflict.

Public-Private Partnerships

Partnerships—whether with nonprofits, companies, or foundations—have become an important part of U.S. foreign assistance. The QDDR identifies public-private and other partnerships as part of a strategy for the United States to engage with countries’ civil societies, as opposed to only state-level actors. As Ambassador Elizabeth Bagley, the Special Representative for Global Partnerships, explains it, “[Partnerships] can mean everything from working with General Mills on food security issues or MTV on documentaries, music videos, and public service announcements on sex trafficking through the MTV EXIT (End Exploitation and Trafficking) campaign that has reached audiences across Europe and Asia.” Other examples include the State Department’s Global Alliance for Clean Cookstoves, which brings together “public, private, and non-profit partners to help overcome the market barriers that currently impede the production, deployment, and use of clean cookstoves in the developing world.” USAID is also partnering up. Since 2001, according to Administrator Rajiv Shah, “USAID has joined forces with over 3,000 organizations in more than 1,000 partnerships…On average we have leveraged $4 for every $1 of USAID funding.” One notable example is the New Alliance, an initiative to bolster food security and nutrition in Africa in partnership with several private firms.

Public-private partnerships in the context of U.S. development agencies attract both praise and criticism. Interestingly, one of the most comprehensive recent commentaries comes from U.S. Navy Admiral James Stavridis and his senior advisor for private-public partnerships, Evelyn Farkas. While noting that partnerships can bring resources and expertise, they argue that they sometimes let private companies, not the government, “set priorities.” They add that joint projects are sometimes chosen because they are easily done, not because they are needed or effective.

What do you think?

What is the future of U.S. foreign assistance funding? Are U.S. development agencies using public-private partnerships effectively? Will trade with Africa become a greater priority for the Obama administration during the second term? Let us know your thoughts in the comments section below, and stay tuned for future Question of the Week posts.

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