International Affairs Budget
A new proposal emanating from the United States Congress titled “Investing in 21st Century Diplomacy” aims to increase the International Affairs Budget by $12 billion in 2022. The proposal, which Sens. Chris Van Hollen and Chris Murphy recently created along with Reps. Ami Bera and David Cicilline, primarily targets a trio of crucial issues that the congressional leaders have singled out for funding.

Pandemic Preparedness and Global Health

One of those issues stems from the global response to the COVID-19 pandemic. Near the onset of the pandemic in March 2020, a study found that over two-thirds of health centers and clinics in Nepal and Bangladesh did not have any face masks. Additionally, countries like the Democratic Republic of Congo (DRC) scored poorly on reviews of preparedness to protect healthcare workers with a noted lack of sustainable response plans cited among other factors in the results.

The effects of the COVID-19 pandemic hit the economies of developing countries particularly hard. In fact, a United Nations Development Programme study found that over a billion people may end up in extreme poverty by 2030 due to the effects of the pandemic. The United Nations did a study to determine the estimate, indicating that the economy lost $100 billion in investments in March and April 2020. This was due to a substantial flood of money pouring out of developing countries.

In light of the lessons learned from the ongoing fight against COVID-19 and its toll on developing nations, the aforementioned congressional leaders have crafted a portion of their proposal to address that lack of worldwide resources dedicated to fighting future pandemics. This takes the form of an over $6 billion increase in global health programs and an over $2 billion increase in funds reserved for global health security among other measures. Furthermore, the proposal lists $500 million of funding for the Coalition for Epidemic Preparedness Innovations, a partnership designed to develop vaccines to prevent future pandemics that the United States did not invest in during the 2019 fiscal year.

Competing with China’s Global Influence

While global assistance like this has undergone debate in the United States, China has become a world leader in foreign aid. China’s lending of $104 billion to developing countries rivals that of the World Bank that is lending $106 billion. The implementation of those funds has led to concerns that China is creating, “unsustainable debt burdens” for some low-income countries. Other countries are criticizing China’s growing influence as an attempt to strengthen the nation’s control over the ideologies within developing countries that have accepting significant aid. This has prompted concerns about the promotion of authoritarian governmental models and the censorship of opposing ideologies there.

The Investing in the 21st Century Diplomacy proposal will increase funding to the Global Engagement Center by $85 million. The Global Engagement Center addresses propaganda-related issues. Likewise, the proposed increase to the International Affairs Budget includes funding aimed at combating corruption in developing nations as well. Furthermore, the proposal of creating a boost in the International Affairs Budget includes a doubling of the investment cap set on the Development Finance Corporation, a government organization mainly dedicated to assisting low-and-middle-income countries with development projects. The proposal details this as a step to provide different sources for foreign nations to receive investments. This is in response to the significantly larger size of the Chinese equivalent to the DFC, the China Development Bank.

Green Investments

The proposal also includes funding earmarked for other organizations committed to helping developing countries, specifically in regard to green initiatives. One of the foremost components of that funding is a recommitment to the Green Climate Fund. This will be in the form of $3 billion. The fund will help find and implement green solutions in developing countries.

The United States Congress has not prioritized green solutions and recovery efforts related to COVID-19. In a report, the U.N. Environment Programme and Oxford’s Economic Recovery Project expressed that “only 18% of announced recovery spending can be considered green.”

The proposed increase in funds to the International Affairs Budget addresses a number of important, pressing issues facing the world today. Hopefully, through the International Affairs Budget, these issues will reduce.

Brett Grega
Photo: Wikimedia Commons

Representative Ted Yoho
In February, U.S. Representative Ted Yoho (R-FL). proposed an overhaul to foreign aid. This April, with the support of U.S. Representative Adam Smith (D-WA), and Senators Bob Corker (R-TN) and Chris Coons (D-DE), the Better Utilization of Investments Leading to Development Act (BUILD Act) has gained significant momentum.

The International Development Finance Corporation

The BUILD Act, also known as S.2463, aims to consolidate the disparate U.S. agencies currently providing foreign aid into a single, new agency, to be called the International Development Finance Corporation (IDFC). More specifically, there would be a consolidation of the Overseas Private Investment Corporation (OPIC), USAID’s Credit Authority, USAID’s Office of Private Capital and Microenterprise, and USAID’s Enterprise Funds. According to U.S. Representative Yoho, this consolidation would increase efficiency of foreign spending, and promote U.S. security, economic and diplomatic interests abroad.

The proposed agency will also benefit recipients of U.S. foreign aid. More streamlined and efficient spending in the U.S. government will allow for other countries to become stronger trading partners; in doing so, this change would also open new markets, and encourage self-sufficient economic development in communities worldwide. Supporters of the BUILD Act argue that it will help combat humanitarian concerns that plague many developing nations, including poverty, hunger and disease.

In recent weeks the BUILD Act has been publically supported by the Chairman of the House Foreign Affairs Committee, U.S. Representative Ed Royce (R-CA), the committee saying that older agencies such as OPIC need to be modernized, and as Americans, not as Democrats or Republicans, will strengthen American foreign aid and make the U.S. competitive.

What is the BUILD Act?

So what exactly does the BUILD Act propose? It gives the new agency, the IDFC, grantmaking capability, the ability to make equity investments, and an increased spending cap. These capabilities increase U.S. foreign aid spending, and encourage the participation of private sector capital to complement development assistance objectives. It is important to note however, that there is a regulation on how much of foreign aid spending can be used to make equity investments.

The text of the bill describes the purpose of the BUILD Act in Section 101 of the bill as, “to mobilize private capital in support of sustainable, broad-based economic growth, poverty reduction, and development through demand-driven partnerships with the private sector that further the foreign policy interests of the United States,” highlighting the benefits of the BUILD Act going both to the U.S. and international aid recipients.

While some are concerned about how the organization will actually take over USAID’s and OPIC’s duties, many are excited by the fact that the creation of the IDFC will create further accountability and cost no money, making it an increasingly appealing bill. While more work needs to be done concerning the transition, oversight on the IDFC will fall to Congress, and external auditors, who will preform regular audits of the organization.

Allied For a Cause

U.S. Representative Adam Smith, a co-sponsor on the initial proposal, announced a press release that reads: “Through our partnerships with friends and allies, we work to raise up local communities – strengthening institutions, combating hunger and disease, and ensuring that development projects have sustainable, long lasting impacts.” Representative Smith identifies how this increased spending on development improves the lives of individuals abroad.

The BUILD Act is gaining momentum in Washington, and purports to improve efficiency and effectiveness of U.S. foreign aid deployment.

– Katherine Kirker
Photo: Flickr