At the same time, there have been various calls for scaling back our international engagement. The fiscal year 2018 “skinny” budget proposes a 31% cut to international affairs spending and some have estimated that cuts this deep would involve ending aid to 60 current recipient countries. Commissions, formal or informal, have been proposed to figure out how to meet these goals.
No government agency or program gets it exactly right; there is always room for efficiency and effectiveness improvements. As part of the community working to modernize US foreign assistance, I can vouch for the progress that both State and the US Agency for International Development (USAID) made to increase accountability, improve transparency, and utilize evidence to inform decision making. USAID and the Millennium Challenge Corporation (MCC) have been in the lead on many of these fronts.
Those improvements, however, do not always mean that aid policies work or that the right kind of aid is given to the right countries for the right reasons. Our aid is disbursed far too widely, in some cases to countries of little strategic value and in such small amounts that impact is not achievable. In other cases, strategic countries gobble up nearly half of US economic assistance with little assurance that it can overcome despotic corrupt regimes in order to be effective.
Prioritizing aid (that is, being more selective and focused on where we invest aid dollars, as well as why and how) is a challenging enterprise few administrations have achieved. A bipartisan 2012 project that I co-chaired sought to do just that. Called Engagement Amid Austerity, we evaluated the aid portfolio of each aid recipient using a set of principles and readily available development indices. From that experience, I offer up some lessons learned that could facilitate a new attempt.
- We need to know why we are aiding a country. The fiscal year 2017 budget includes economic and security assistance for 145 countries. On the economic assistance side, USAID has Country Development Cooperation Strategies (CDCS) that outline development goals and the suggested path to achieve them. But, rarely do policymakers ask why we are there in the first place. Simply, we often give aid because we always have; we ignore that there are other ways to cultivate and maintain friends and allies, and to carrot and stick those not in those categories. Our 2012 country-by-country review revealed that some countries had achieved middle income status or were well on their way there, signaling that transitioning off aid is an achievable near-term goal.
- We need to have an aid exit strategy. If we don’t know why we are aiding a country, then we certainly do not know how to stop. Country Development Cooperation Strategies should articulate an exit plan with short- and long-term metrics. Involving developing countries in crafting those exit strategies will provide the ownership that we believe makes development sustainable and will prevent them from viewing the end of aid as a downgrading of the bilateral relationship. Instead, it should be seen as a development success and signal the transition to more sophisticated forms of economic engagement.
- Conflating diplomacy and development prevents countries from transitioning off aid. Diplomacy and development are distinct endeavors that both support US foreign policy objectives. Aid levels are often judged by developing countries as a measure of relations with Washington. US diplomats will rarely recommend cutting aid (sanctions notwithstanding) preferring to use aid as a means to increase their access to government officials and keep the bilateral relationship on an even keel. But, the purpose of development is not diplomacy. The purpose is to achieve a self-sustaining engine of economic growth where aid is no longer needed.
- Separate strategic aid from development aid. Nonetheless, I am sympathetic to diplomatic necessities. We need to admit that aid is sometimes provided to countries despite their poor records of success, commitment to development, human rights record, or embrace of democracy. The Economic Support Fund (ESF) was created to aid countries of strategic interest to the United States and that would not otherwise be eligible for U.S. aid. Over time, ESF has evolved into a separate development fund, primarily managed by the State Department. Many countries receive ESF on top of other aid, such as Development Assistance, PEPFAR, or Global Health. It’s time to return ESF to its origins and allow State to use it for strategic purposes.
- Transitioning off aid should be rewarded and private-led development encouraged. Even middle and high income countries have development challenges and pockets of poverty. US aid programs can end with the creation of an Enterprise Fund for Development. Three partners -- the US government, the host government, and the private sector – could provide one-time funding for an endowment to be used to tackle those remaining challenges. Representatives of the three partners should serve as a board of directors to approve direction and objectives.
- Use evidence to guide prioritization decisions. In our 2012 country-by-country review, we used widely available indices to create a panel of evidence for each country. These included poverty levels, governance indicators including corruption and transparency, the business environment, flows of foreign direct investment, and overall levels of official development assistance from other donors. Applied uniformly to all countries, the method is transparent and similar to how the Millennium Challenge Corporation chooses compact countries.
We need to recognize that working to achieve a politically stable and economically prosperous world is part of an America First agenda. Wealthy countries, many of them former aid recipients, form the core that buys US products and services. That’s good for our economy and good for our security.
Dr. Connie Veillette is a Senior Fellow at The Lugar Center.