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Global Relations: A Brief History of US Foreign Aid Policy

Brief History of US Foreign Aid Policy
When hearing the term “foreign aid,” one probably thinks of the U.S. giving money to poor countries for food and water. While this assumption is partially correct, U.S. foreign aid is also a means of economic and political strategic fodder for the U.S. Foreign aid often includes providing money to foreign countries for militarization efforts or providing assistance from the U.S. military itself.

U.S. Foreign Aid

While some oppose the U.S. giving aid to other countries in favor of using the same money to bolster the U.S. economy and provide national security, they usually do so under the false pre-tense that around 25 percent of our national budget is geared toward foreign aid; the real number is only around 1.5 percent.

In fact, foreign aid acts as economic investment with other countries and creates trading allies, providing a return on investment. Also, foreign aid works to provide national security for the U.S. by stabilizing countries rife with conflict and poverty; such measures often end wars before they even begin. This notion was confirmed by a letter to President Trump from over 120 retired generals, urging the president to reconsider the ‘benefits’ of the proposed cuts to the foreign aid budget.

Throughout the history of U.S. foreign aid, one can simply follow our military. Here are four of the big shifts in U.S. foreign aid policy.

Marshall Plan

Foreign aid, as we consider it now, started post-WWII. In 1947, two years after the war, Secretary of State George C. Marshall insisted at a Harvard commencement ceremony that the U.S. needed an aggressive plan to rebuild Europe. The Marshall Plan, officially known as the European Recovery Program, passed the next year.

In the next four years, the U.S. provided more than $13 billion in aid to European nations. The move, while helpful, was also tinged with a political agenda — the U.S. needed allies in Europe against an emerging enemy, the Soviet Union. The U.S. remains close allies with these European nations and 13 of them are current NATO members.

President Harry S Truman supplemented the humanitarian efforts provided by the Marshall Plan with further military and economic aid to allies in Europe by way of the Point Four Program, a technical aid program aimed at sharing U.S. technology and knowledge of agriculture and industry. This measure was ultimately a gesture meant to create allies against the emerging USSR. Truman then signed the Mutual Security Act of 1951, which replaced the Marshall Plan and shifted its priorities to containing the spread of communism.

Foreign Assistance Act of 1961

The United States Agency for International Development (USAID) was created out of the Foreign Assistance Act of 1961 by President John F. Kennedy. The assumption was that by combining foreign aid programs, the U.S. could be a better leader and moral authority for the rest of the world (read: prevent the spread of communism).

USAID is now the main operator of U.S. foreign aid programs, leading development and humanitarian efforts across the globe ranging from the Feed the Future program, a global food security program providing funding, health services, water and protection to aiding peoples suffering from conflicts in South Sudan.

The Cold War

In the 1970s, the focus of foreign aid shifted from economic and political development, to meeting “basic human needs.” This lead to an emphasis on food production, nutrition, health and education — all means to providing developing countries with the means to be self-sufficient. Still, there was a political tinge. The U.S. was largely acting on anti-communism interests and Middle East peace initiatives. As a result of these priorities, Israel and Egypt became large recipients from U.S. aid.

Toward the end of the 1980s, Congress was tasked with reducing the national deficit and foreign aid was at less than 1 percent of the national budget. Still, foreign aid followed into the same countries as our military including Panama in 1990 after the U.S. invaded Panama during Operation Just Cause under President George H. W. Bush.

Due to the end of the Cold War and Congress’s continued efforts to maintain the budget deficit, foreign aid remained less than 1 percent of the federal budget until the U.S. invasion of Iraq in 2003.

Contemporary Foreign Aid

From 2003-2014, Iraq and Afghanistan received increases in economic and military assistance from the U.S. Afghanistan became the largest recipient of U.S. aid in 2017 at $4.7 billion. President George W. Bush also created the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) in 2003, which supports over 14 million people in over 50 countries living with HIV/AIDS. PEPFAR’s website claims to have helped more than 2.2 million babies to be born HIV-free to pregnant women living with HIV and AIDS.

In 2008, President Obama renewed PEPFAR and also signed the U.S. President’s Policy Directive on Global Development. The Obama administration called it the first of its time, but the measure resembles Kennedy’s act to instill the U.S. by way of foreign assistance and development at the forefront of moral and economic authority globally. The directive has a wide berth of goals aimed at providing increased global food security, global health and national security by working on poverty-related issues in impoverished nations.

Today, President Trump continues to insist we trim the U.S. foreign aid budget by over 30 percent, which will inevitably cut some humanitarian programs entirely. The Trump administration claims the cuts will go to bolstering national security, but as we’ve learned and as over 120 retired generals stated to President Trump, U.S. foreign aid is a form of national security.

– Nick Hodges
Photo: Flickr

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The Boomerang Effect: How Foreign Aid Gives Back

Foreign aid gives backForeign aid is too often misidentified as charity, with the implication of a one-way relationship. Like other myths surrounding aid, such as its depletion of the federal budget, a reality much different than popular belief silently survives. In truth, only one percent of the U.S. federal budget goes toward foreign aid and shrouded in much the same circumstances lies the fact that foreign aid gives back just as much, and more.

Who Gives to Whom?

According to an article by Jason Hickel, Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics completed a study in which they found that a much larger amount of money travels from poor countries to rich countries, rather than the other way around. As of 2015, cumulative foreign investment in the U.S. totaled more than $3 trillion.

Beyond the quantitative, the proof of return on investment manifests in countries like South Korea, Japan and Germany. All having once depended on U.S. aid in their times of need, these nations now play major roles in the global economy.

How Foreign Aid Gives Back to Developed Nations

Consider the fact that half of U.S. exports now go to developing countries and that developing countries’ economies grow three times faster than our own. The economics speak for themselves—with more new consumers to trade and do business with, more growth opportunities arise both at home and abroad. In Tennessee alone, more than 22 percent of jobs are supported by trade—that’s 830,000 reasons to continue investing in developing nations.

Beyond the wallet, though, foreign aid gives back in ways that cannot be measured. Potential new markets keep the U.S. competitive on the world stage, allowing its reputation and influence to spread. As Bill Gates points out, foreign aid even helps to keep the U.S. safe. By its nature, aid fights poverty, promotes development and largely focuses on foundational areas like healthcare, nutrition and education, which provide for a strong infrastructure.

The ultimate goal of this infrastructure-building rests in the ability to form a middle class, and by extension, find some stability. Countries that achieve this are more capable of preventing global health epidemics and are less likely to go to war. Stabilizing these nations by promoting democracy and human rights and by helping to install strong governance has far-reaching effects.

What Drawbacks Exist for Foreign Aid?

While some would argue that corruption and misuse of aid render the process futile, the results drown out the argument. Programs are in place to fight against this kind of criminality and are finding success. Foreign aid gives back in ways never thought of before now, such as:

  • Stopping diseases before they gain global reach.
  • Promoting U.S. exports.
  • Countering violent extremism.
  • Combating climate change through education.
  • Supporting overseas embassies and new allies.

Foreign aid gives back despite the stigma that claims otherwise. Experts say that cutting the U.S. foreign aid budget would do very little to reduce the federal deficit anyway. If the strongest argument against the use of foreign aid remains money, then it is time to take out the wallet and make a change.

– Daniel Staesser

Photo: Flickr

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Understanding the Negative Effects of Budget Cuts to USAID

cuts to USAIDRecently, 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

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U.S. Signals Possible Change in Foreign Assistance Programs

In a recent internal memo titled “America First Foreign Assistance Policy,” U.S. Ambassador to the United Nations Nikki Haley outlines possible aid cuts to nations that vote against U.S. initiatives within the U.N. It is suggested that foreign assistance programs should be partially contingent upon voting with the U.S. at the U.N. The memo comes in the wake of the United States’ motion to move its embassy to Jerusalem, a move that recognizes Jerusalem as the capital of Israel.

Although the motion passed, it was also met with widespread condemnation; 128 countries in total condemned the move. In response, the United States threatened to cut foreign aid programs. Commenting on the vote at a recent AIPAC conference, Haley stated, “We’re not forgetting that vote. As I said at the time: On that vote, we were taking names.”

As of today, only Palestine has received cuts in foreign aid assistance. This is largely due to the Palestinian Authority’s refusal to enter into peace negotiations with Israel. In the view of the Palestinian government, the United States has lost its position as the neutral-party at the negotiating table.

A major element of Haley’s “America First Foreign Assistance Policy” is the direct link between foreign assistance programs and American security interests. For example, Iraq and Egypt remain exempt from cuts in foreign aid even though both countries have voted against the United States in the past on multiple resolutions. It is argued that continued aid to Iraq and Egypt is vital in protecting U.S. security interests in the Middle East.

Countries not exempted from cuts who offer the U.S. little economic or security benefit could see major shifts in aid assistance. Specifically, American foreign assistance programs in Ghana, Vietnam and Zimbabwe are under fire. $4.9 million to aid in Ghana’s construction of schools, Vietnam’s $6.6 million climate change program and a $3.1 million job training initiative in Zimbabwe are highlighted in the document. Currently, aid programs for roughly 40 countries who have voted against the U.S. in the past are under review.

In addition to the details of the “America First Foreign Assistance Policy” document, the State Department has put more than $100 million on hold in funding for the U.N. Relief and Works Agency (UNRWA). Another $100 million requested by the Bureau of Population, Refugees and Migration has also been denied. It is unclear as to why the funds have been denied or when they may be approved.

With the recent release of U.S. Ambassador Nikki Haley’s proposal for major changes to American foreign assistance programs, there is much concern for countries that receive U.S. aid, most notably for nations viewed as nonessential to U.S. economic and security interests. Furthermore, countries that lack a track record of voting with the U.S. on U.N. resolutions could face serious cuts.

It is unknown whether these policy changes will be formally adopted in Washington, D.C. The proposed changes have seen much backlash from both the Department of Defense and intelligence community. Ultimately, the American mission to eradicate international poverty and obtain global security is at risk.

– Colby McCoy

Photo: Flickr

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10 Facts About USAID That Everyone Should Know

10 Facts About USAIDThe United States Agency for International Development (USAID) is the world’s premier development organization. Founded in 1961, the agency has overseen decades of world economic growth and an unprecedented reduction in global poverty.

 

10 Important Facts About USAID:

 

  1. USAID is an independent agency of the U.S. federal government and operates subject to the guidance of the President, the Secretary of State and the National Security Council.
  2. USAID is the largest provider of food assistance in the world.
  3. USAID’s annual budget of $27 billion is larger than the national spending of 165 countries.
  4. Intervention by USAID is always subject to careful analysis to prevent disruption of local agricultural production, markets and adverse effects on recipient nation currencies.
  5. USAID’s budget, spending and programs are subject to oversight and auditing by the Office of Management and Budget in the White House, and the Government Accountability Office under the legislative branch. All of its budget and oversight documents are public record.
  6. USAID has made steady improvement in recent years in rankings by the International Aid Transparency Initiative, primarily due to better data management and increased technology modernization.
  7. As these 10 facts about USAID demonstrate, the organization’s mission involves much more than direct crisis aid. Besides food and disaster relief, USAID has major directives in health, human rights and governance, education, economic growth, agriculture and food security and gender equality.
  8. A significant number of countries have gone from recipients of USAID programs to become donor nations themselves. The Republic of Korea and Brazil are two prime examples.
  9. USAID’s spending accounts for less than one-half of one percent of the U.S. federal budget.
  10. After decades of change, in 2013 USAID launched a new mission statement for the 21st century built on two pillars: ending extreme poverty, and promoting democratic, resilient societies.

As a key pillar in development efforts worldwide, USAID is central to the history of this century, as the world stands on the cusp of some of its greatest humanitarian achievements while, at the same time, facing unprecedented ecological challenges. USAID is a leader and a massively experienced player in facing the world’s biggest problems. Strategies to improve aid and development around the world and to sustain progress into the future rely on these facts about USAID.

– Paul Robertson

Photo: Flickr

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Economic Growth and Development Act to Build New Partnerships

The Economic Growth and Development Act The Economic Growth and Development Act, currently under review in the House and the Senate, promises to create a partnership between private sector donations and U.S. foreign aid. Mobilizing corporate donations could be a crucial component in reaching the underfunded Sustainable Development Goals by 2030.

The Sustainable Development Goals (SDG) are 17 goals that lie within five focus areas: people, the planet, prosperity, peace and partnership. SDGs continue building upon the achievements of their predecessor, the Millennium Development Goals (MDG). The goals operate under the principle that ending poverty is a crucial component in attaining sustainable development.

The “people” goals of SDG target poverty and hunger while fostering equality and access to quality education and healthcare. The “planet” goals promote sustainable management of resources and encourage environmentally-friendly consumption and production practices. The “prosperity” goals cultivate green economic, social and technological development to protect the environment for future generations. The “peace” goals advance peace, justice and inclusivity. The “partnership” goal acknowledges that successful implementation of the prior goals requires a global partnership and encourages nations to collaborate for sustainable change.

Currently, SDG efforts are severely underfunded. The Brookings Institute estimates that the successful implementation of these goals will require additional annual funding of $2.5-$4.5 trillion. An additional $13.5 trillion will be needed to fulfill the Paris climate accord.

Filling this funding gap might require new sources of revenue. MDG programs were largely financed by official development assistance given by donor governments targeting specific milestones in needy countries. Official development assistance, once a prominent funding source for developing nations, now only accounts for 10 percent of financial flows into poor countries. Private flows, including private capital and philanthropy, now account for 90 percent of financial flows into developing countries.

The proposed Economic Growth and Development Act could help provide the additional capital necessary to help the SDGs become a reality. The Sustainable Development Goals depend more on domestic and international finance for funding than the Millennium Development Goals. Implementers of the new goals foresee a prominent role for the private sector as a catalyst for inclusive economic growth.

The Economic Growth and Development Act aims to boost market-based economic growth in target countries by encouraging private sector investment in development. To accomplish this, the Act will mandate the creation of an inter-agency facility to intertwine private sector foreign aid initiatives with the U.S. government’s agenda. Furthermore, the Act will ensure better coordination between different U.S. departments to ease private sector immersion into government programs.

The Act will align U.S. foreign aid projects with the domestic economic and social agenda of developing countries. This eliminates potential tensions between the development goals of the U.S. and recipient countries. Ultimately, the initiative will supplement government funding of priority sectors in target countries.

Partnerships between public and private sector foreign assistance initiatives have proven successful in the past. Two Obama-era programs, Feed the Future and Power Africa, both benefitted from corporate donations. Feed the Future has received $10 billion from more than 200 companies, while Power Africa has received $20 billion from more than 100 companies.

Engaging the private sector in development projects creates shared value by creating a public good in a vulnerable area while simultaneously increasing profits for partner businesses.

The bill was introduced in the House by Rep. Ted Yoho (R-FL) and has 22 cosponsors, 13 Republicans and nine Democrats. The bill is cosponsored in the Senate by Sen. Johnny Isakson (R-GA), Sen. David Perdue (R-GA) and Sen. Christopher Coons (D-DE).

Mobilizing private sector donations with the Economic Growth and Development Act could increase financial flows to Sustainable Development Goal programs. Linking private philanthropy with U.S. foreign aid programs could contribute to the successful implementation of these goals by 2030.

– Katherine Parks

Photo: Flickr

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Senate Debates the Purpose of Assisting the Developing World

U.S. Assistance to the Developing World
“Could each of you tell me the purpose of the United States giving economic assistance to other countries?” These were the words Senator Bob Corker used to kick off the debate over the effectiveness of current U.S. allocations, and the purpose of U.S. assistance to the developing world.

In general, all of the witnesses agreed that the purpose of U.S. assistance to the developing world is to promote economic growth and the conditions that sustain it, but each participant expressed nuances regarding how this goal can be accomplished.

Dr. Jeffrey Herbst, CEO of Newseum, believes that the key to improving U.S. assistance is to ensure the accountability of recipient governments. In his introductory remarks, he recommended that countries meet certain performance outcomes or be subject to the withdrawal of aid.

“If the recipient country is not committed,” said Herbst, “to private sector growth and a dynamic economy, then no matter what the design of foreign assistance is…the aid is not going to have a significant effect.”

But this is also a matter of perspective. Alicia Phillips Mandaville, Vice President of Global Development at InterAction, explained that many of the factors affecting program success are overlooked due to a lack of technical tools. Mandaville emphasized growth diagnostics and cost-benefit analyses to determine the real obstacles to growth and whether those can be overcome in the long term.

For instance, Mandaville pointed out that one common barrier to growth in West African countries is poor infrastructure. Roads there are congested and do not accommodate large transport vehicles, so the perceived solution is to simply make an infrastructure investment.

However, from a technical point of view, high transport costs are created not by the macro-situation, but rather by its surrounding actors. “The problem is that there are three different ministries allowed to set up safety checkpoints,” Mandaville explained. “So you’ve tripled the instances for graft, and you’ve slowed down speed by threefold.”

Mandaville and Herbst’s examples underscore this trend of awarding targeted aid programs to countries with strong records of good governance.

To round out this idea, Dr. Todd Moss of the Center for Global Development stressed that the future of U.S. assistance lies in the public-private partnership. Highlighting initiatives such as USAID’s “Power Africa,” he expressed that “the deployment of commercial capital for public policy purposes” is the greatest enabler of economic growth.

To date, “Power Africa” has secured funds from private actors such as the Africa Finance Corporation ($25 million) and SolarNow ($2 million), combining them with government contributions like those from the Swedish Development Agency ($1 billion).

The conclusion, then, is clear: the purpose of U.S. assistance to the developing world is to enable growth in countries committed to democratic governance. This assistance will compete with that of other donors (such as China) by enforcing metric-contingent funding, and it will promote the public-private investment model as its vehicle for deployment.

These changes are a signal to prospective governments that the U.S. is committed to producing results and not just “buying friends.”

– Alfredo Cumerma

Photo: Flickr

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A Brief History of US Foreign Aid Initiatives

U.S. Foreign AidU.S. foreign aid has had a variety of strategic and humanitarian purposes throughout the 20th century. Although initiatives have changed across the decades to address the global “hot topics” of the day, the focus has always been on using aid to address crises, create security and spark development.

U.S. distribution of foreign aid began at the onset of World War I, when in 1914, President Hoover created the Commission for the Relief of Belgium (CRB) to combat a severe food shortage in German-occupied Belgium and Northern France.

In 1917, the U.S. Food Administration provided food for the United States Army and to the millions of people affected by World War I.

International development as a tool for foreign policy began following World War II. The Marshall Plan, diverting $13 billion in aid, allowed Europe to rebuild its infrastructure and strengthen its economy.

In 1949, President Harry S. Truman proposed an international development assistance program. This Cold War initiative sought to reduce poverty, increase production in developing countries and combat communism by helping countries thrive under capitalism.

In 1961, President Kennedy signed the Foreign Assistance Act, which created USAID. The president also introduced the Peace Corps the same year, which was intended to spread America’s goodwill and positive image across the globe.

In the 1970s, the Foreign Assistance Act underwent substantial changes which gave food, nutrition and healthcare aid priority when assisting a foreign nation.

In the 1980s, we saw the introduction of a new method of aid giving: using celebrities to gain support for a cause. In 1985, the Live Aid concert, featuring stars like Led Zepplin, Queen, Tina Turner and Madonna, raised $140 million toward fighting poverty and hunger in Africa. This was at a particularly urgent time due to a major drought in Ethiopia that caused widespread famine.

In the 1990s, with the end of the Cold War, USAID’s top priority of U.S. foreign aid became sustainable development, focusing on aid that would help nations become self-sufficient.

One of the major U.S. foreign missions was in Somalia in 1992. Famine and ongoing civil war in Somalia led to a humanitarian relief effort by sending troops and delivering basic supplies. Although the military intervention was largely unsuccessful, it served as a learning point for how both U.S. and U.N. interventions should be conducted.

The 2000s created an extra urgency around foreign aid as a means of creating stability. Development is included as one of three pillars of U.S. national security.

The President’s Emergency Plan for AIDS Relief was created in 2003 and President George W. Bush created the Millennium Challenge Corporation in 2004.

Some politicians argue that the U.S. should solve its own humanitarian issues before getting involved in other countries. However, America’s role as a world power makes it impossible for the country to turn a blind eye to the plights of other nations.

History has shown that U.S. foreign aid, if monitored and updated correctly, can do great things to fight poverty and ensure security.

– Taylor Resteghini

Sources: Oxfam America, PBS, USAID
Photo: Flickr

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USAID: Interview with International Development Worker

international_development
Since 2009, USAID’s budget has gone down by about 16 percent. The United States’ foreign aid organization is already underfunded, making up less than one percent of the federal budget. Yet, USAID has 1,920 projects across almost every continent in the world.

With so little funding, it is impressive how much the organization can accomplish. Given the funding cuts, I talked to an active international development specialist and visiting professor at Colorado College.

Dr. Joseph Derdzinski had much experience with law and security forces in foreign countries during his time in the U.S. Air Force. Since then, he has conducted research on the democratic consolidation processes of post-authoritarian states as well as serving on election observation missions in Afghanistan and Egypt.

Q: Why do you think that USAID’s funding has gone down so significantly since 2009?

A: USAID was a main focal point of building infrastructure in Iraq and Afghanistan, so USAID funding was contingent on Afghanistan and Iraq. The reduction in USAID’s funding and budget is largely due to a reduction of foreign military personnel as well as development agencies from Afghanistan and Iraq.

Q: Why is the organization so underfunded?

A: It would make sense to fund more fully the agency, but there’s very little will from taxpayers or incentive for elected officials to increase USAID’s funding. In the annual federal budget, foreign aid doesn’t get the same level of attention as other budget items or priorities. This is due in part to the low level of understanding of how little funding foreign aid programs actually receive.

During or in the immediate wake of a war, foreign development funding is easier to justify, but it’s harder for a lawmaker to make a case for aid once the war is over. Moreover, everything to do with the war in Iraq, including development projects, was never part of the annual budgets. They were a supplement to the annual budget.

Q: Can you give me an example of how foreign aid helps the United States?

A: What’s happening in Greece in terms of migrations of people into Greece is a good example. The great majority who aren’t from Syria are fleeing authoritarian regimes and economic woes. And that’s the same as what’s happening at the U.S. border. Migrants to the US are fleeing social unrest and oppressive regimes.

And so, if the goal is to keep people in their home countries, one potential impact of international development is to allow people the option to remain in their home countries.

Q: Would you say that the budget cuts make working in international development difficult?

A: Yes, now more than ever it is more challenging to work in international development.

Conclusion: USAID is an important and undervalued organization in the United States. While at first glance, the work that USAID is doing may appear to primarily benefit the countries that are receiving assistance, it is in fact work that is beneficial to the United States as a whole. International development creates jobs for Americans, protects national security, and as Dr. Derdzinski described, can assist with the United States’ immigration dilemma.

With all of these factors kept in mind, foreign development assistance should no longer be something that is difficult for lawmakers to justify, but rather should be an integral part of policymaking.

– Clare Holtzman

Sources: Colorado College, Foreign Policy, USAID 1, USAID 2
Photo: United States Air Force Academy

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USAID Success Story: The Millennium Challenge Corporation

Millennium_Challenge_Corporation
Since 2004, the Millennium Challenge Corporation (MCC) has successfully worked to alleviate poverty in 39 nations worldwide. Created to facilitate “smart U.S. foreign assistance,” the U.S. foreign aid agency takes a unique, country-based approach to addressing the root causes of poverty.

The MCC has approved over $10 billion in programs to promote sustainable economic growth. It partners with low- and middle-income nations to fund country-led initiatives that open markets, educate populations and encourage national and international investment.

“Funding is not a ‘giveaway,’ but a benefit that a country earns through hard work and good policy performance,” said John Hewko, vice president of the MCC from 2004-2009, “Recipient countries identify problems and solutions locally rather than accepting programs that are often viewed as highly politicized and motivated by objectives other than long-term development.”

The MCC first determines the eligibility of a nation to receive funding through a rigorous, competitive selection process. Countries must prove that their existing policies promote good governance, transparency, economic freedom and investment in citizens.

Some governments have dramatically altered their laws to openly endorse market growth. This phenomenon – termed the “MCC effect” – encouraged the nation of El Salvador to reduce business start up time from 115 to 26 days in order to apply for MCC funding in 2005.

The MCC then analyzes a country’s proposal for funding and determines whether it can realistically attain its goals within the span of a five-year “compact.” A compact requires a country’s physical and financial investment in a program in exchange for MCC funding. A local municipality called a Millennium Challenge Account (MCA) manages the compact implementation, and independent fiscal agents monitor funds thoroughly and transparently.

In 2007, the Millennium Challenge Corporation invested in a $461 million compact with El Salvador focusing on infrastructure and human development. The compact required that local municipalities and beneficiary communities fund a small portion of project costs.

The MCC projects that the compact will provide employment and economic opportunity to over 700,000 Salvadorans in the next 20 years.

Since the compact’s implementation in 2006, over 10,000 people in El Salvador and major cities in the U.S. participated in consultations. Several business owners in the U.S. have invested in long-term, business opportunities in the Northern Zone, which has been impoverished since the Civil War in the 1980s.

MCC efforts in El Salvador have produced tangible results and garnered international acclaim. Upon completion in 2012, the compact expanded electrification to 12 percent more households, provided potable water to 7,600 families and allowed 12,000 Salvadorans – 60 percent women – to access vocational training.

The El Salvador Compact has also expanded economic opportunities for dairy farmers and other small businesses that operate in the isolated Northern Zone. FOMILENIO, the MCA of the El Salvador Compact, managed construction of the Northern Transnational Highway Project. Improved road connectivity combined with investments in training, technology and product marketing assisted 17,500 producers.

In September 2014, the MCC established another $277 million compact in El Salvador to address lack of employment and infrastructure to continue its legacy.

“The MCC process has generated significant goodwill in developing countries and contributed to U.S. foreign policy objectives in those where it operates,” said Hewko.

– Paulina Menichiello

Sources: The Brookings Institution, The Carnegie Endowment for International Peace, The World Bank
Photo: Segura Consulting LLC

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