How Should the U.S. Reform Foreign Assistance in a Period of Great Power Competition?
By Dan Runde | OCTOBER 26, 2018
The Trump Administration is going through a review of foreign assistance. That’s good: We should review our aid, because we want to ensure that it is effective, supporting our broader foreign and national security policy and meeting the needs of our partners.
We have a lot of challenges, including:
China, a real competitor in offering aid
Radical terrorists, such as ISIS and narco-funded criminal gangs
Uncontrolled migration, which is growing
Increasing risk of pandemics
All of these challenges require a 30-year strategy and a bipartisan consensus on the challenges similar to the Cold War. This means the Trump Administration should work with both Republicans and Democrats in Congress on a strategy because these problems will be with us beyond the next 2 or 6 years of the Trump Administration.
The good news is that from all reports the questions being asked in the review are relevant questions. How can we counter China using foreign assistance? How can do a better job countering terrorists with non-military power? How can we tell if we are getting value for the money we are spending? How can we ensure that the Multilateral Development Banks (MDBs) are serving as force multipliers of American interests? Can America get a bigger piece of the contracting pie from the MDBs? All are legitimate and good questions to ask.
The bad news is that the process pursued to date has not brought in expert voices, and only in the 11th hour have they brought in the relevant agencies involved in U.S. foreign assistance. Rather, a small group of individuals at the White House undertook a classified desk review and only now have they brought in other stakeholders, including those from U.S. foreign assistance agencies. Looking at this from the outside, I am concerned that some of the preconceptions going into the study may be incomplete or faulty.
Another worry is that the process will very quickly lead to some sort of declaration of policy by President Trump that will impact the next proposed “soft power” budget due in early 2019 – and all future soft power budgets put forward by the Trump Administration.
To date, the Trump Administration has proposed two budgets with 30 percent cuts to foreign aid that have then been largely ignored by Congress, which restored most of the funding. These proposed budgets signal to adversaries and allies our intentions. They also are used for (fictional) planning by the Executive Branch. Also, as changes in Congress inevitably happen, the other worry is that appropriators might go wobbly.
Here are some initial thoughts for the foreign assistance review that should be kept in mind:
First, foreign assistance has to be part of a larger strategy and part of a larger international economic strategy. We have a good National Security Strategy but for the challenges we face, we need an adjunct international economic strategy. We don’t.
Dozens of countries are getting rich and want different things from the world: investment, trade and infrastructure. We are not working with these countries in the right way, and in some ways, China is doing a better job. There are about 30 countries that are conflict-affected and the main sources of illicit drugs, pandemics, forced migrants, terrorists, and trafficked people. These countries require an entirely different set of approaches.
U.S. foreign assistance cannot solve big problems on its own. Most challenges require working with allies and very often working with willing partners on the ground.
Telling countries “Don’t take Chinese money and Chinese project offers” is not a strategy.
Sadly, the Trump Administration seems to be going around to African, Latin American and South East Asian countries warning them not to take Chinese money – without offering any real alternative. If one is the head of state for a poor country and has the option of “no port” or a Chinese-financed port built very badly, one is going to choose the Chinese port. We have to enable an alternative to what the Chinese are offering.
“Enabling an alternative” does not have to mean that the U.S. meets China dollar for dollar. It does mean that to compete we must make use of a fully functional U.S. Export-Import Bank, utilize the new international development finance corporation (that will result from the recently passed BUILD Act), leverage the MDBs, and work with our British, Australian, and Japanese allies more. It also means leveraging American capital markets and may even mean creating yet another vehicle to counter Chinese mega infrastructure investments.
Measuring impact can be hard. If we only do things that are easy to measure, we will only do basic health and education and emergency relief. Measuring the impact of our foreign aid spent on good governance, “building state capacity,” keeping potential terrorists from joining terror groups, or fighting corruption, can take 10 or more years to see results. For example, one could argue that because Colombia is growing more illicit drugs than a few years ago, that Colombia is a failure – or you could argue that the FARC has been brought to heel, the Colombians are hosting more than 1 million Venezuelans and because we have supported pro-growth and pro-peace efforts with our aid, diplomacy, and security, Colombians are not coming in droves to the U.S. illegally.
We should renew our leadership of the MDBs and make sure they are working in a direction that works for us. It would be a good thing for the Trump Administration to recruit and propose U.S. representatives in their positions and for the Senate to confirm them. We also need to signal to other shareholders we are not, under any circumstances, getting out of any of these MDBs and we ought to slow walk future share increases by China.
If we measure success on U.N. votes in favor of Israel as a metric of success we are always going to lose. We do not give enough foreign aidto almost any country to sway them on Israel or nearly any other diplomatic issue. Very few countries get more than 5 percent of their GNP from all foreign aid. I support Israel, but trying to get other countries to vote our way on Israel in the U.N. using our foreign aid spending is not going to work.
The Trump Administration pulled off a legislative miracle with the BUILD Act. That required bringing Democrats along. The truth is that the U.S. government has not looked hard at foreign assistance since the HELP Commission in 2007. There is appetite across the aisle to make some needed fixes on soft power issues. But this means making sure the Trump Administration runs a process that builds a consensus and leverages the momentum and goodwill generated by the success of the BUILD Act.
If done right, the Trump Administration has the opportunity to make some needed changes. If done wrong, the Trump Administration’s review will meet major pushback on the Hill and the review will fail.
Daniel Runde is a Senior Vice President and William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies. He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America, and the Middle East.