For the fiscal year 2017, the US reportedly spent $38.2 billion on International Development and Humanitarian Assistance. This bucket of obligated funds includes diverging categories with the majority of the funds earmarked to HIV/AIDS, disaster assistance, and conflict, peace and security programs.
There are many problems with the US approach starting with confusion over defining what constitutes development; is it a proactive strategy, a reactive tactic or a political tool, as it is currently being applied.
Within the US, discussions have been fraught with contempt for the disproportionate US financial commitment versus the abysmal track-record of economic growth, stability and resilience to future shocks recipient nations are experiencing.
Is the Trump administration trying to figure out a way to overcome the disconnect? In what appears to be an evolution in development approach, just this month President Trump signed a bill forming the US International Development Finance Corporation (USIDFC).
Although this announcement conjures thoughts stemming from America’s commitment to underprivileged nations’ needs, it is not an altruistic exercise but a shift of development focus towards broad-based economic growth and high standards of transparency.
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Development and humanitarian needs were never high on Trump’s agenda. Humanitarian responses garnered his attention only when lack of response would adversely affect him politically. We’ve seen him in action in the aftermath of hurricane Maria in 2017 as a first test of his presidency.
He visited affected areas for photo-ops, activated FEMA, and tweeted response updates. Perhaps the administration’s response was adequate in Texas and Florida, but it was a failure in Puerto Rico.
Despite that, Trump assigned his administration an “A-Plus” grade for its response. Comparing this to International humanitarian responses, Trump does not pay any political price for lack of response.
Trump’s new approach, including the creation of the USIDFC, is shifting international aid paradigm form traditional humanitarian objectives to national security concerns to counter China’s growing global influenceWalid Jawad
The development equation
Trump has been in a competition with former US presidents; Democratic Obama firstly and Republican Bush second, in general terms. This was the case in his response to domestic humanitarian needs. But when it comes to global needs, he prides himself on saving American taxpayers dollars deemed to be wasted on such aid.
In fact, his announced position leading up to his presidency confirms his dislike for such programs. Delivering on his campaign promise to slash development budgets, he gutted the US Agency for International Development (USAID) rendering it a shell of its old self.
Up to date, FY 2018 the USAID reported obligated amount of $6.8 billion is a fraction of the FY 2017 obligated amount of 20.5 billion according to USAID’s Foreign Aid Dashboard.
No longer would Washington use aid as a soft power tool in its public diplomacy toolbox. The White House trend toward development is confirmed on an individual level. A slice of American citizens, federal employees, are giving less over the years.
The Combined Federal Campaign (CFC), went from $280 million in 2009 to around $180 million in 2015 (the most recent data available on OPM.gov). This declining amount of donation by this group signals the general mood of the American people.
Americans are becoming more cynical about the effectiveness of their country’s aid spending. Donor fatigue is a nation-wide phenomenon prompting many to question the effectiveness of US aid strategy.
The convoluted rules and regulations international recipients must abide by has created a parallel environment whereby a whole industry is created within the receiving nation. Exaggerated costs create micro inflationary effects rendering considerable amount of aid dollars wasted.
US contractors and international aid organizations reaping the benefits instead of the people those dollars are earmarked to serve. A major reevaluation is in order.
Currently, aid is delivered in the form of specific solutions and criteria for success to satisfy a predetermined need assessed by the US government, often with limited input from those most affected in the recipient nation. The US approach of superiority leads to inefficiencies and waste in absence of sustainable results.
The US will be able to stretch its development dollars if it adopts a collaborative approach with recipient nations. Further, it should experiment with infusing private and public sector cash into some localities instead of delivering tangible items and services.
Angelie Petersen, a development expert, explained “the ‘Buy American’ act that governs all US procured goods results in pricey American agricultural and food products being supplied as part of the development package”.
“Beneficiaries access these goods at a highly subsidized rate or provided for free which effectively kills any smallholder market dependent on selling their goods in the local market economy.”
She further said: “when comparing the cost of providing such inputs imported through US development programs versus the cost of the same input in the local market cannot be compared.” While this type of direct aid such as food aid or shelter has a critical role to play post-acute emergency, worthy development aid recipient nations will probably benefit more efficiently if the US injects cash into their market system to stimulate organic economic growth versus dependency.
The experiment where USAID partnered with GiveDirectly in rural Rwanda has proved valuable and revealing. In this experiment, they’ve divided villages into three sets. One set receiving help through the predetermined program of creating village nutrition schools at an average cost of $120 per person.
The second set of villages received only cash in varying amounts by less than the average cost of the program. The third and final group of villages received cash amounts of just over $500. Malnutrition continued to be a problem in the first two sets of villages.
However, the third set of villages, malnutrition was a thing of the past. In the process, this third set organically created a thriving society with a flourishing economic system without any input from the US or program contractors.
According to Mark Green the USAID Administrator, the goals of the new USIDFC are:
“(1) align the United States Government’s development-finance tools with broader foreign-policy and development goals, and enhance their competitiveness;
(2) minimize risk to the American taxpayer by establishing appropriate risk-management protocols, including for co-investment with the private sector; and
(3) increase efficiency by reducing duplicate efforts in the US Government’s development-finance programs.”
All of which are development jargon for the mission; to “catalyze market-based, private-sector development, spur economic growth in less-developed countries, and advance the foreign-policy interests of the United States,” according to Green. The foreign-policy interest of the US being the operative concept.
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Trump’s new approach, including the creation of the USIDFC, is shifting international aid paradigm form traditional humanitarian objectives to national security concerns to counter China’s growing global influence. Beijing came out of the blue to rival the US in generosity. Up until last year, China’s foreign aid expenditure was a mystery treated as a state secret.
Once revealed, in late 2017, the expenditure shows a pattern of creating long-lasting patrons depended on China through its Belt and Road Initiative. The White House is going on the offensive to quell China’s expanding sphere of influence around the world. Countries in Africa and Latin America being the priority.
Development should not be co-opted to function as a tactical security tool. Similarly, development must be separated from international humanitarian assistance ending the current classification of joining these two independent approaches under one budgetary umbrella.
Disaster relief and other humanitarian efforts are altruistic, short-term actions that should never be pegged to any gains or beneficial outcome. For development to be effective, the US must trust and relinquish priority setting to recipient nations.
Whereby, the US limits its scope to providing advice and infusing equitable mechanisms for distributing cash or facilities to worthy localities. Patience and sustained economic resilience is the key to a successful long-term development strategy.
Walid Jawad is a former Senior Policy Analyst at US Department of State and a former Washington, DC correspondent. He covered American politics for a number of TV outlets since 1997. Walid holds an undergraduate degree (B.A) in Decision Science and Management Information Systems and a Masters in Conflict Analysis and Resolution. You can follow him @walidaj.
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