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The U.S. Foreign Aid Freeze
On August 3, 2019, the White House Office of Management and Budget (OMB) ordered two federal agencies to temporarily freeze billions of foreign aid funding. This decision ordered the State Department and the United States Agency for International Development (USAID) to provide accounts for all unobligated resources of foreign aid. Rachel Semmel, a spokeswoman for the Budget Office, said the order aims to ensure accountability. According to the Associated Press (AP), the letter lists 10 areas that the U.S. foreign aid freeze targets, including development assistance, global health programs and United Nations peacekeeping. In total, the freeze puts $2 billion to $4 billion of congressionally-approved funding on hold.

Subsequent Response

The U.S. foreign aid freeze has met with bipartisan criticism. Chairman of the House Foreign Affairs Committee, Rep. Eliot Engel said that the Trump administration has amounted to contempt and emphasized that congressionally-approved foreign aid is law and backed by the Constitution. Sen. Lindsey Graham’s criticism was harsher, labeling the freeze insane. In a letter to the OMB, lawmakers from both parties agreed that cutting foreign aid and development spending would not be in the interest of national security.

Critics of the OMB’s decision point to the fact that foreign aid spending makes up less than one-tenth of 1 percent of the federal budget. Before the freeze, the U.S. spent $30 billion annually on programs to reduce global poverty. Liz Schrayer, the chief executive of the U.S. Global Leadership Coalition, claims the OMB is cutting one of the smallest portions of the federal budget, but one that could have catastrophic impacts on U.S. economic and national security interests.

Impacted Countries

The U.S. foreign aid freeze will directly affect Malawi, one of the world’s least developed countries. The nation consistently ranks very low in various health indicators, such as life expectancy, infant mortality rate and maternal mortality rate. In addition, an estimated one million people or 9.2 percent of adults in Malawi live with HIV/AIDS with an estimated 13,000 deaths annually. In Malawi, USAID works to improve the quality of life by supporting development, education and health programs, especially those that prevent and treat malaria, tuberculosis and HIV. Due to the Trump administration’s order, Malawi may not have aid for the remainder of this financial year. According to documents that Foreign Policy obtained, the freeze could also affect foreign aid to countries in Africa, Asia and the Middle East.

Funding for UNICEF projects to protect children account for a large portion of the U.S. foreign aid freeze. One of these programs involves early childhood education and development in Uzbekistan. According to UNICEF, only 30 percent of Uzbek children attend preschool while 70 percent are unable to achieve their full potential due to a lack of early education. UNICEF is rolling its program out across six regions in Uzbekistan and it has designed it to increase access to quality education for children. Regional instructors have trained 2,159 preschool teachers in child-centered learning and model schools, which have increased enrollment by 2,841 children. The U.S. foreign aid freeze will have a direct impact on similar programs across the globe.

Bipartisan Solution

On August 15, 2019, the OMB sent an official rescission request to the State Department to cut foreign aid funding by more than $4 billion, yet canceled the request a few days later. Since taking office in 2017, the Trump administration has made numerous attempts to cut foreign aid funding, and in some cases by as much as 30 percent. Members of both parties in Congress firmly rejected all attempts. Daniel Runde, former director of the Global Development Alliance (GDA) in the Bush administration, says development, diplomacy and defense experts are in full agreement that the Trump administration should work collaboratively with Congress to create a more robust and sustainable approach to foreign aid and development.

– Adam Bentz
Photo: Flickr

Stop the Migrant Crisis
Circulating the United States news cycle as of late is the migrant crisis at the border. From the conditions in which authorities hold migrants to the bills Congress is pushing, such as the Keeping Families Together Act and the Dignity for Detained Immigrants Act, migrants from Central America have captivated the news as well as the minds of most Americans. One might wonder why so many Central Americans are making their way to the border. This article will explore how increasing foreign aid may stop the migrant crisis.

The Migrant Crisis

The majority of migrants at the border are coming from Central America, specifically El Salvador, Guatemala and Honduras, or the Northern Triangle of Central America. These are some of the most dangerous countries, with each of them being on the top 10 list of most homicides in the world. People in these regions face violence, such as gender-based violence and gang violence, political instability and extreme poverty, which makes the perilous journey to the United States seem like the most optimistic of options.

These countries face factors that can help explain why people are fleeing their home countries at such a rate. Studies have found that for every 10 homicides in these all three countries, six children wish to enter the United States. In 2018, there were 51 homicides per 100,000, with around 3,340 homicides in El Salvador. Police attributed these murders to the two prominent gangs in El Salvador called MS13 and the Barrio 18. Guatemala had a homicide rate of 22.4 per 100,000 and Honduras had a homicide rate of 40 per 100,000, both being extremely high compared to the homicide rate of other Central and South American countries.

What Caused the Crisis?

One can possibly attribute the recent influx of migrants from these countries to the foreign aid cuts that the current administration has made. According to the State Department, the 2019 fiscal year cut nearly $700 million in funding to these countries. Some believe that these cuts would force people to stay in their countries while others believe that keeping the cuts would allow people to save their money and use it to immigrate to the United States.

The money the United States gave to Central America funds social programs in order to build these countries up and tackle the root causes of their problems. Some of these root causes are violence, lack of education, food insecurity and poverty. The money mainly funds social programs or government reform that would improve living conditions, incentivizing citizens to stay. These programs include after-school programs, programs to create jobs and programs that help strengthen police forces and the court systems.

How Foreign Aid Helps

In these cases, the foreign aid funding these programs and helping different social agencies and NGOs does in fact work. For example, in El Salvador, a United States funded program trains children for employment. The area that implemented this program saw that homicide rates lowered by 78 percent. The United States Global Leadership Commission also breaks down what the funding in each country does and the different programs it funds. In El Salvador, the commission focuses on improving the rule of law and citizen security. However, in Guatemala, funding focuses on fighting poverty, and in Honduras, funding goes towards fighting corruption. In all of these different endeavors, funding has made a positive difference and helped improve living conditions for citizens. This further shows that to stop the migrant crisis, the United States must increase foreign aid.

Conclusion

Using funding for these social programs allows Central Americans and their countries to grow, thrive and prosper. When a country succeeds and gives its citizens ample opportunities to be successful and live their life to the fullest, those citizens may want to stay in said country. Therefore, it seems that the only way to stop the migrant crisis would be an increase in foreign aid to give the Northern Triangle people a reason to stay in their homes and enjoy a better life in their own countries.

– Sydney Toy
Photo: Flickr

Immigration and US Gun Policy
Thousands on the migrant caravan were outside Arriaga, Chiapas. To avoid some of the heat of the day they began walking at 2 am. Negotiations began in the dark, and shortly after dawn, the caravan continued towards Juchitan, Oaxaca. As the U.S. tightens its immigration policy at the border, civilians throughout Central America are struggling to cope with the bloodshed largely brought about by smuggled, American-made guns. Here is some information explaining the influence of immigration and U.S. gun policy on Mexico and various other Central American countries.

Variations in Gun Laws

Mexico and the United States have different gun laws. Although the constitutions of both countries protect a citizen’s rights to bear arms, Mexico’s licensing process is more rigorous. In Mexico, only one establishment, the Secretariat of National Defense (SEDENA), can produce and sell firearms. Anyone who purchases a gun in Mexico must register the weapon with this defense department. Even after proving employment, military service, proof of residence, picture identification, a Unique Population Registry Code and no criminal record, the country still bans some styles of AR and AK assault rifles from civilian purchase. Gun policy in the U.S. is far more relaxed giving further incentives to smugglers and those who hope to profit by obtaining guns illegally.

Smuggling Firearms has Increased

The illicit presence of U.S. guns has increased across Central America. Between 2011 and 2016, the Bureau of Alcohol, Tobacco, and Firearms (ATF) found that a licensed gun dealer in the U.S. purchased 70 percent of 106,001 guns that Mexican law enforcement recovered. Forty-nine percent, 45 percent and 29 percent of guns recovered from El Salvador, Honduras and Guatemala, respectively, were of U.S. origin. Between 2014 and 2016, El-Salvador had more U.S. sourced guns used for a crime than 20 states combined.

This type of activity, where someone purchases a gun legally only to give that firearm to someone who cannot purchase a gun legally, is a straw purchase. According to Gifford’s Law Center, U.S. law does not currently regulate or prohibit this act enough for change to occur.

Violent Crime

People use the majority of these smuggled weapons for violent crimes. The U.S. Government Accountability Office concluded in 2016 that just around half of the guns that the U.S. manufactured or purchased in Mexico at the time were either semi-automatic, AK or AR rifles. Mexican government officials are concerned because these firearm models can easily become automatic in style and have become the choice weapon of gang members for that reason.

Violent gun crime has grown substantially in recent years in this part of the world. The current rate of homicide in Mexico is 20.5 per 100,000 people. The percentage of fatal shooting homicides increased from 15 percent in 1997 to 66 percent in 2017. Firearm usage also grew from 58 percent to 68 percent in Mexican robberies between 2005 and 2017.

Many cite the overall increase in violence as a major reason for the increased northbound movement of Central American refugees and asylum seekers. Known as the migrant caravan, groups of up to 10,000 will join together on their trek towards a less violent and less corrupt life. They are unlikely to find a solution to this type of life until their countries address their serious political problems.

The profits from gun sales in the Central American States fuel the violence and corruption still present in those countries. Weaponry will continue to pour into these countries for profit. As of February 2019, the Trump administration solidified a new approach to international arms deals allowing for little to no congressional oversight on large sales. This process is to go to the Department of Commerce instead of the State Department.

Paths Towards Improvement

Though immigration and U.S. gun policy have a close relationship as of now, there are legitimate solutions all individuals can participate in. Three possible paths to follow towards improvement include to:

  1. Encourage U.S. congressional leaders to support universal background checks in upcoming legislative sessions. Some have attempted these efforts but have not promoted them enough. A 2017 effort “to stop the flow of arms to Mexico” by one California representative and two New York representatives in the U.S. House stalled. Policymakers allow for individuals that cannot purchase guns to resort to even more opaque transactions, because they have not yet instituted background checks for all gun sales and purchases in the U.S. If it is true that people who desire weaponry will find a way to obtain it, the best option moving forward is to at least ensure every step possible is taken to keep guns out of the wrong.
  2. Support moves that would make straw purchasing and gun trafficking a federal crime. In the status quo, the only crime a straw purchaser or gun trafficker can receive charges for is paperwork violation. Any introduction of law specifically targeting those willingly involved in these acts is in the U.S. and Central America’s best interest.
  3. Increase access to data regarding specific details of recovered firearms. Being able to know the types and calibers of certain firearms could be very helpful in identifying which are the most widespread and may need increased supervision. Also, ATF reports cross-referencing types with U.S. states of origin could be very useful for local and state legislative bodies to know whether or not their direct action is necessary.

The presence of U.S. guns has become something of an epidemic for Central Americans. People in the United States and across Central America can benefit from changing the narrative surrounding immigration and U.S. gun policy.

– Fatemeh Zahra Yarali
Photo: Flickr

 

President Trump’s Threat to Cut Foreign Aid
President Trump’s administration has proposed cutting the foreign aid budget, hindering the country’s ability to fund outreach organizations and decreasing the country’s global influence. Such threats limit low-middle income countries’ ability to grow out of poverty and increase potential security threats. While President Trump claims that the U.S. spends a great deal of money on foreign aid (currently $54.4 billion), this figure makes up only 0.26 percent of the country’s total GDP.

President Trump’s Threat to Cut Foreign Aid

The U.S. spends $598 billion on the military budget, according to The National Priorities Project. Congress has consistently rejected the President’s proposals to cut funding for Central America in an effort to promote peace and assistance, as well as decrease illegal immigration. However, negotiations are becoming difficult as the current administration increases threats to slash aid. President Trump is implementing a “New Africa Strategy” with foreign aid, where he plans to only spend aid in foreign countries that will further U.S. priorities and be of benefit to the country. The administration stated that they will no longer provide aid to countries working against U.S. interests.

Foreign Aid, Domestic Improvement

These measures neglect the fact that many countries that the U.S. sends foreign aid to become consumers of U.S. goods once they are self-sufficient. In fact, 43 of the top 50 nations consuming U.S. agriculture products are former aid recipients and reaping a large return effect.
Foreign aid strengthens the U.S. economy by creating more markets and trading partners. For example, the Marshall Plan involved the U.S. sending aid to rebuild Western Europe — a plan that proved cost-effective due to its market creation that resulted in strengthening the U.S. economy. Studies suggest that rather than neglecting nations that don’t directly help the U.S., more aid should actually be sent to countries that resort to violence.

More Aid, More Allies

The countries who pose the greatest security threat to the U.S. are the ones receiving the least aid, according to Foreign Policy; however, by investing in health and development instead of the military, the U.S. could actually increase security. Countries receiving health and development aid tend to move towards peace and favor the U.S. By giving aid to countries and allowing them to rise up towards a more stable living environment, they become more peaceful and, in turn, better allies for the United States.
These facts gained from studies on foreign aid suggest that in order to promote U.S. influence and international economic growth and decrease security threats and illegal immigration, foreign aid should be increased.
– Anna Power
Photo: USAID

Poverty in Iran

As Iran is currently at the epicenter of geopolitics and regional conflicts in the turbulent Middle East, the country’s role in international affairs is steadily growing in importance. Moreover, the Iran nuclear deal is also revitalizing Iran’s presence and significance on the global stage at the same time.

The Current Situation in Iran

According to the World Bank Group, Iran’s GDP in 2017 was $439.5 billion while its population peaked at 80.6 million. On the poverty alleviation front, poverty in Iran fell from 13.1 percent to 8.1 percent between the years 2009 to 2013. Also, in the changing dynamic of its domestic politics and a new wave of secularism and liberalism brought on by a burgeoning young population in the country, addressing poverty in Iran is a very key objective for various stakeholder groups.

However, according to a report by the Independent from Dec. 2017, the economic situation in Iran appears rather bleak in some regard because food prices are on the rise and unemployment figures are at an all-time high at over 12.4 percent. Expanding income inequalities in the country are also becoming quite widespread due to major deficiencies in the taxation and welfare systems offered to the people.

How Iran’s Political Climate Could Affect Poverty

Historically, since the culmination of the Pahlavi dynasty and revolution in Iran in 1979, the country’s social and economic progress has been a vital priority. In recent years, owing to the perceived threat of its nuclear arsenal, Iran’s diplomatic relations with its western counterparts have impacted its trade and commerce majorly due to the imposition of crippling international sanctions.

Furthermore, the changing attitudes of the Trump administration are a major threat to the deal as it may be detrimental to the future economic and diplomatic recovery Iran is trying to seek. Unfortunately, the collapse of the deal could be a major hindrance to countering poverty in Iran.

The Iran nuclear deal can help greatly bolster the capacity to alleviate poverty in Iran due to the level of investment Iran could easily achieve in the future with the expansion of its oil market, given its vast and abundant reserves. Iran can boost its oil output, GDP and household incomes in the future with diminished sanctions.

Consequently, the introduction of the Iran nuclear deal was followed by noticeable economic recovery in the country with Iran’s economy growing at an annual rate of about 12.5 percent after a sizeable contraction of about 1.6 percent in the year 2015. The country hopes to maintain growth amounting to four percent annually.

Alleviating Poverty in Iran through Investment

Moreover, remediating poverty in Iran can also be achieved by increasing the level of investment and tapping into Iran’s potential. Iran is beginning to expand and diversify its industries, especially its hydrocarbon, agriculture and services sectors, and is also continuing to focus on boosting its financial and manufacturing capabilities as well. Additionally, this may help decrease Iran’s over-reliance on its oil market as prices have often tended to remain quite volatile, especially in recent years.

The government is also implementing its twentieth-year vision and sixth five-year development plan in order to focus more on market-based reforms and techniques. This strategy is targeting three important realms: economy, science and technology. The subsidy reforms orchestrated by the government will directly help reduce poverty in Iran as they aim to target price adjustment and further increase cash transfers to low-income households in the country.

Alleviating poverty in Iran shall largely depend on existing and future initiatives that involve opening up the economy further, engaging in economic and trade liberalization with its key trading partners and embarking on further domestic structural reforms.

– Shivani Ekkanath
Photo: Flickr

cuts to USAID
Recently, the Trump administration, in collaboration with congressional leadership on Capitol Hill, has hammered out a deal to prevent a government shutdown while effectively gutting the State Department and agencies like USAID of their funding. This move not only signals a sidelining of diplomacy but marks one of the biggest budget cuts to USAID and the State Department since the early 1990s.

The effects of the budget cuts to USAID are undoubtedly going to hinder diplomatic agencies in eliminating poverty around the globe and increasing diplomatic relations with the countries that depend on us the most. The United States Agency for International Development (USAID) is the State Department’s main tool for dispensing aid to foreign countries and strengthening diplomatic relations.

USAID currently operates in roughly 100 countries, fighting the spread of poverty and disease while working to improve economic conditions worldwide. The proposed budget cuts to USAID weigh in at approximately $9 billion, a staggering defeat to those working toward the end of poverty worldwide.

The President’s proposed budget cuts to USAID amount to nearly one-third of its total budget, in what seems to be a strategic move away from diplomacy and toward military strengthening. Regardless of the President’s agenda, this move away from soft power and diplomacy has been condemned by many members of the military.

A total of 151 retired senior military commanders, including former chiefs of the Navy, Army, Air Force, Marine Corps and Special Operations Command, have warned that a reduction of this magnitude could have detrimental effects around the globe. As threats to the United States’ national security continue to grow, it is a risk to decrease diplomatic ties at such a pivotal moment.

Many civilians and government employees agree with the opinions of their military leaders. Former USAID Administrator Andrew Natsios said, when facing the 1999 budget cuts to foreign aid, that it is likely budget cuts could have detrimental effects toward the technical expertise of USAID and could mark the beginning of a disaster in the long-term.

As well as the statement above, Natsios describes budget cuts toward foreign aid and agencies such as USAID as an “evisceration of the most important tool of American influence in the developing world.” Other staffers from USAID warn of the spread of disease in the United States rising as foreign aid spending is cut. Outbreaks such as the Ebola outbreak may become much larger and harder to contain with a lack of funding to agencies such as USAID. These concerns are still relevant and even more serious today.

Agencies such as USAID are pivotal in diplomatic relations and national security. By providing funds, resources, goods and trade to other countries, the U.S. invests in itself as well as others. By providing healthcare to those in need, USAID prevents the spread of communicable diseases, prevents premature death and builds a market for low-cost medical technologies.

By providing food and farming technologies, the U.S. prevents world hunger and promotes market trading of produce and other consumable goods. By providing foreign aid, the country also helps form more efficiently-run governments and promotes democracy wherever possible. All of these efforts also prevent bigger catastrophes around the globe, such as mass migrations, food shortages and natural disasters.

At the end of March, Congress approved an omnibus appropriations bill for FY18 that will keep the government open through September 30, 2018. When it comes to funding for development and diplomacy, the omnibus overwhelmingly rejects the deep and disproportionate cuts proposed by the Administration in FY18 – highlighting the strong bipartisan support in Congress for these critical programs. Still, there is more work to be done to protect funding for the foreign aid budget in FY19 and beyond. 

 

Email Congress in Support of the International Affairs Budget

– Dalton Westfall

Photo: Flickr

U.S. benefits from foreign aid to JordanJordan is a Middle Eastern region tucked in between Saudi Arabia, Iraq, Syria, Israel and Palestine. The U.S. benefits from foreign aid to Jordan in many different ways.

  1. Foreign aid boosts American exports.
    USAID provides assistance for medium to small-scale enterprises, employing up to 75 percent of Jordan’s workforce. As a result of funding business development since 2006, tens of thousands of jobs have been created, yielding $1 billion in new investment. Since then, exports from Jordan to the U.S. have increased by almost $50 million.
  1. Trade with Jordan supports jobs in the U.S.
    The U.S. benefits from foreign aid to Jordan in a multitude of ways, but it also benefits from trade. Jordan currently ranks sixty-seventh among the largest U.S. trading partners. The U.S. and Jordan entered a Free Trade Agreement in 2001, eventually eliminating business tariffs for bilateral trade in goods and services, a huge benefit for U.S. companies. According to the latest data, U.S. exports of goods and services to Jordan supported an estimated 11,000 American jobs in the year 2015.
  1. Jordan is a peace broker in the Middle East.
    Nestled in the heart of the Arab Spring, Jordan is a voice for moderation, peace and reform in the Middle East, a region saturated with turmoil. Jordan’s central geographic position creates pressure on the Jordanian government for economic and democratic reform. The U.S. benefits from foreign aid to Jordan by strengthening the Middle Eastern nation’s political and economic processes, which in turn counters terrorist groups such as ISIL and promotes the Middle East peace process.
  1. Jordan assists with the refugee crisis.
    Jordan is a haven for many Syrian and Iraqi refugees. U.S. aid supports a bilateral relationship by helping Jordan temporarily absorb over 635,000 Syrian refugees and 52,000 Iraqi refugees. The influx of refugees is a challenge for the Jordanian government, but with a strong agenda for political and economic reform, and with the help of U.S. aid, Jordan serves as a partner with the U.S. in addressing the Syrian refugee conflict.
  1. Foreign Aid increases American influence and interests.
    The U.S. benefits from foreign aid to Jordan because it helps boost international leadership. Foreign aid puts America on an influential level in international politics. When U.S. foreign aid is promoting a region, it boosts American interests. The Middle East faces a complex regional conflict, which affects American soil with terrorism and refugee crises. By contributing to humanitarian aid and development, American interests hold more power.

Assistance to the Middle East and North Africa has been a highly debated topic in the United States, particularly in the recent past with President Trump’s administration’s proposed 2018 budget cut targeting international aid. In truth, there are many ways the U.S. benefits from foreign aid to Jordan greatly.

– Alex Galante

Photo: Wikimedia Commons

The President’s Emergency Plan for AIDS Relief (PEPFAR) was created in 2003 as a cornerstone of the global HIV/AIDS response. In the 14 years since its inception, PEPFAR has helped 13 million people receive counseling and antiretroviral therapy.

PEPFAR has gone through multiple iterations and been managed by three U.S. presidents. The program is currently managed by the Trump administration, which, on December 1, launched the PEPFAR Strategy for Accelerating HIV/AIDS Epidemic Control.

PEPFAR’s accelerated strategy includes putting a focus on 13 countries with an exceptional HIV/AIDS burden. The countries, Kenya, Zambia, Côte d’Ivoire, the United Republic of Tanzania, Uganda, Zimbabwe, Malawi, Lesotho, Botswana, Namibia, Swaziland, Haiti and Rwanda, will be receiving widespread and much-needed antiretroviral therapy coverage. The strategy also includes a strong focus on young girls and women with HIV and AIDS.

The ultimate goal of PEPFAR’s accelerated strategy is to gain control of the epidemic in these 13 countries by the year 2020. Though the prospective outcome is bright, this change could bring about more issues than anticipated.

In May, President Trump announced his plan to restructure the federal budget. Approximately 19 percent of the HIV/AIDS global care and prevention budget is proposed to be cut in 2018. Prior to PEPFAR’s accelerated strategy, the program was providing assistance to 50 countries around the world. The plan is to continue providing assistance to those countries while also providing extra provisions to the 13 focus countries.

While it is important, of course, to increase assistance where the burden is heavier, it is also important that other vulnerable communities aren’t left behind. With a lowered budget and the focus of PEPFAR being shifted, worldwide HIV/AIDS prevention and recovery programs are at risk.

Important programs like safe needle exchange, counseling for sex workers and homosexual men and care for children living with HIV and AIDS could potentially lose funding. Without these and other programs, there’s a high chance that infection rates will increase rather than decrease.

The general notion of the focus shift is a positive one. By gaining epidemic control in the focus countries, PEPFAR would be creating a roadmap for further epidemic control and prevention in other countries.

However, in order to gain epidemic control, infection rates need to be lower. Before making an attempt at an AIDS-free generation, PEPFAR needs to focus on providing prevention as well as treatment to all affected communities.

– Anna Sheps

Photo: Flickr

Trump's HIV Foreign Aid CutsIn May 2017, President Donald Trump unveiled his “skinny budget” plan that would be implemented in the upcoming fiscal year. President Trump’s plan is particularly worrisome for foreign countries that are plagued by HIV, as the plan cuts $1 billion from the President’s Emergency Plan for AIDS Relief (PEPAR) program.

It has been estimated that President Trump’s HIV foreign aid cuts would result in nine million life years lost in South Africa and Ivory Coast, which are two countries that have a predominant problem with the spread of HIV. Specifically, according to humanitarian writer Sebastien Malo, “South Africa has the highest prevalence of HIV worldwide, with 19 percent of its adult population carrying the virus in 2015.”

The U.S. Department of State reported that HIV-infected patients who currently receive antiretroviral therapy funded by U.S. foreign aid would not stop getting treatments. On the other hand, however, it is estimated that 1.8 million people would die from HIV in South Africa and Ivory Coast within 10 years due to President Trump’s HIV foreign aid cuts.

According to the Kaiser Family Foundation, if the Trump administration continues to cut funding for HIV-related programs and research, HIV could transform into a pandemic and affect the world. Jacqueline Alemany, White House reporter, indicated that the foreign aid cuts are due to the Trump administration’s partiality toward defense and military spending.

Thus, a small reduction of $1 billion from the current $6 billion PEPFAR program would potentially cause catastrophic effects around the world. Furthermore, adding to South Africa’s estimated seven million HIV-infected people, Ivory Coast is home to approximately 460,000 HIV-infected people. All in all, as Malo questions, “would the relatively small savings realized by currently proposed budget reductions be worth these large humanitarian costs?”

Now, the U.S. government is left to determine whether or not the budget cuts are worth the potential humanitarian crisis caused by an enormous loss of life and the spread of HIV.

Emily Santora

Photo: Flickr

Arguments for and Against the Overseas Private Investment CorporationSince the Trump administration has taken office, the International Affairs budget has come under attack. Among the many potential items to be cut, the Overseas Private Investment Corporation (OPIC) has been singled out by the administration as a particularly unnecessary agency.

As a result, a slew of arguments for and against the Overseas Private Investment Corporation have been published in recent months. This article is an attempt to provide clarity about the role of OPIC and suggest that its overall benefits outweigh its costs.

Established by President Nixon in 1971, OPIC provides loans and political risk insurance to private American companies seeking to invest in developing countries. Developmental financing was conceived as a complement to governmental aid insofar as it facilitated the transference of private capital to developing economies.

Critics of OPIC often argue that, as a public institution, the agency crowds out private banks that should, in theory, be more efficient financiers of international development.

The truth is that, although a robust private market for developmental finance exists, private capital oftentimes averts especially risky and poor countries due to the inevitably high premiums and interest rates.

OPIC, on the other hand, is in a unique position to support investments in these countries.

With the backing of the U.S. government, OPIC has been able to recover over 90 percent of its political risk claims. This fact has allowed the agency to offer affordable loans and political risk insurance in countries deemed too risky by private finance institutions.

Other critics of OPIC claim that it represents a form of “corporate welfare,” citing the fact that the agency gives loans to some of the largest U.S. firms, like J.P. Morgan, Citibank, and Wells Fargo.

Although all American firms are welcome to apply for financing, year after year, more than half of OPIC’s commitments go to small- and medium-sized businesses.

Even if one remains unconvinced about the benefits of OPIC, it is important to recognize that the agency imposes virtually no cost on the U.S. government. While OPIC does require federal backing to insure its $20 billion worth of outstanding loans, the agency has been self-sustaining for almost four decades. In fact, it has used its interest receipts to contribute nearly $4 billion to U.S. deficit reduction.

In the end, while there are many arguments for and against the Overseas Private Investment Corporation, the truth is that the agency has a net positive effect on American firms and developing economies alike.

Nathaniel Sher

Photo: Flickr