How Does the Debt Debate Affect Foreign Aid?
from Renewing America and Renewing America: Debt and Deficits

How Does the Debt Debate Affect Foreign Aid?

The U.S. debt ceiling and deficit debate has led to challenges on foreign aid spending, but while aid could be leaner and more effective, CFR’s Stewart Patrick argues Congress should look to consolidate programs rather than simply cut them.

July 26, 2011 12:32 pm (EST)

To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.

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Budget, Debt, and Deficits

The U.S. debt ceiling and deficit debate has led to new scrutiny about spending on foreign aid. The House Foreign Affairs committee approved a State Department and foreign operations authorization (WashPost) bill on July 20 that included over $6 billion in cuts, including restricting aid to Pakistan without greater cooperation on terrorism, as well as other highly debated measures. Stewart Patrick, director of CFR’s International Institutions and Global Governance program, acknowledges that cuts in foreign aid should be on the table, but that they "should be proportional and no more than cuts that are made to the rest of the federal budget." He also says that while foreign aid could become leaner and more effective, lawmakers "would have to change the paradigm in which we actually deliver foreign assistance." He argues that foreign aid should be consolidated into less agencies and accounts and should be less donor driven to allow for more opportunities on the ground.

The House measure still has to pass the full House and has to be reconciled with Senate priorities, but what does the panel’s bill indicate about the trajectory of the debate over foreign aid?

It’s clear that in this budgetary environment, everything has to be on the table. You can’t simply have State Department operations and foreign assistance as a sacred cow. Everyone realizes that there has to be cuts. But already this year, there have been draconian reductions in State Department budgets that surpass [those called for in] other agencies. For instance, the fiscal 2011 budget got slashed by $8 billion in a deal that was struck to avoid a government shutdown in April. So, already, the State department has taken a hit.

Apparently most [conservative policymakers] don’t accept the argument the Obama administration has been making, and which the Bush administration made, which is that the State Department and USAID and are parts of a larger national security budget. The perennial difficulty with the so-called "international operations account," which includes State and USAID, is that there is no national constituency for those programs. When you look at the Pentagon and its gargantuan budget, it’s likely that every single congressional district in the United States has either a U.S. military installation or a defense contractor.

It seems foreign aid is already declining and perhaps pegged for future cuts. Can foreign aid get leaner without harming foreign policy?

There are ways for you to do as well or conceivably even better with less, but you would have to change the paradigm in which we actually deliver foreign assistance.

The current context is that foreign aid has gone up significantly over the last few years. These are cuts to foreign aid that had been increasing in part as a result of 9/11, and also as part of U.S. national security strategy where [the argument that] it was important to increase soft power resources. But the argument that these are soft power resources that we really need to nurture is in question right now. Is there a way to make it leaner and more effective? There have been a lot of efforts to do that. There’s been increased emphasis on aid effectiveness within the Obama administration—but one of the ironies of the proposed cuts would be to actually eliminate the budgetary office at USAID geared to improving aid effectiveness.

One problem with foreign aid is it is tied by law to use of U.S. service providers and U.S. sourced materials and commodities—whether it’s agricultural goods or technical assistance or other things. Often what’s happening is that money ends up actually being spent in the United States, and rather little is spent on procuring things locally within the target countries—helping to build productive and institutional capacity in those countries.

So, you could always do better. There are ways for you to do as well or conceivably even better with less, but you would have to change the paradigm in which we actually deliver foreign assistance--have it be far-less donor driven and donor implemented, and really try to cultivate local partners.

How effective are provisions that would tie aid to specific actions? The House bill, for instance, would place restrictions on some of Pakistan’s aid (Dawn).

There are already so many reporting mandates and conditional provisions on U.S. foreign assistance. It really deprives the State Department, and particularly U.S. ambassadors in the field, the flexibility that they need to move nimbly in the field. I understand Congressional frustration, but this sort of congressional micromanaging of U.S. foreign assistance can really be counterproductive.

In the Pentagon, they talk about an 8,000-mile screwdriver where you have the Pentagon and the secretary of defense trying to micromanage military decisions or programs in other parts of the world. It’s particularly difficult when this is happening in Congress, where you have a whole lot of people with a whole lot of different screwdrivers trying to tighten different parts of things, leaving very little flexibility for officials on the ground. The notion that you could somehow verify that no member of the Pakistani cabinet has any ties to any extremist group, including that might be interested in winning the battle over Kashmir against India, is a laughable proposition.

Are there any other provisions you are concerned about being cut either because of budget or ideological reasons?

[Congress] cut funding for the National Endowment for Democracy (NED) on the grounds that the Bureau of Democracy Human Rights and Labor (DHRL) does that work anyway. That is extremely shortsighted. DHRL is such a small bureau and doesn’t have anywhere near the resources that NED does. The NED, in terms of getting bang for your buck, is probably one of the more effective uses of U.S. foreign assistance, particularly given the Arab Spring, or the Second Arab revolt, if you want to call it that.

[In the past decade,] there’s been a migration of authority and resources from the State Department to the Defense Department for certain things—including financing for training and equipping counterinsurgency, counterterrorism, and stability operations. That trend is deeply problematic because it will increase the imbalance in U.S. foreign policy and risk of the continued appearance of U.S. militarization in foreign policy, which was so obvious after 9/11. There needs to be a civilian face on U.S. foreign and national security policy.

It’s argued that the United States spends more than any other single country on foreign aid. Americans vastly overestimate how much the U.S. is spending on other nations according to some polls. What are we getting for our money that is perhaps not evident to most Americans?

Although we spend more than any other country, we don’t look nearly as good on a per capita basis, so in that regard we are middling at best. Often, we’ve been at the back of the pack. To some degree, this has been rectified over the past couple of years.

Clearly, there’s going to have to be some cuts in foreign aid. Those cuts should be proportional and no more than cuts that are made to the rest of the federal budget.

One of the things we are getting is some regional stability that we wouldn’t be getting otherwise. We’re also avoiding the worst of many atrocities; we’re sort of stabilizing the a number of situations. We’re also getting  major responses to humanitarian catastrophes. Some people have said that the international community, particularly the U.S., has been slow off the mark in Somalia. But the UN High Commission for Refugees is doing incredible work as well as the World Food Program and others in trying to avert the starvation of millions of people. The World Health Organization, another talented UN agency, is at the forefront of looking at new and emerging infectious diseases. It’s important for people to remember that there are many different [aspects to the] United Nations. It’s worth it for the United States to be in there in a pretty robust fashion.

The UN is something that we need to continue investing in because it remains, like it or not, a perceived source of international legitimacy around the world. So that’s one thing we’re gaining from foreign aid and international operations expenses. Looking more broadly, we do gain a certain amount of good will for our foreign assistance. The Millennium Challenge Account has been pretty effective in delivering aid to countries that have decent policies and institutional environments—helping them get over the hump and continue to improve what they do.

What should the United States be doing on foreign aid going forward, given the debt debate and the country’s significant fiscal restraints and political climate?

There’s going to have to be some cuts in foreign aid. Those cuts should be proportional and no more than those made to the rest of the federal budget. U.S. foreign aid could definitely be more effective and efficient if there were consolidation of the many spigots in which foreign aid comes out. So many of the different aspects of foreign assistance are not only spread across scores of different U.S. government entities, but they also are subject to the jurisdiction of multiple congressional committees and subcommittees.

The Obama administration should sit down with members of Congress and look at areas of potential consolidation—but [negotiations] will require some compromise from members of congress who don’t want to give up jurisdiction over appropriations. That’s a serious conversation that we need to have.

The other thing is that we definitely need to look hard at just some of these huge Pentagon weapons programs that we frankly don’t need. There are some people who just refuse to cut anything having to do with defense because they don’t want to look weak. But it’s just totally irresponsible to be going after these important civilian power resources, and at the same time providing something of a blank check to the Pentagon.

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