Watch Out for Republicans Offering Advice on Foreign Aid

Do you want to wait before helping this kid
until his government is efficient in using foreign assistance?
Image source: Filipe Moreira via flickr

There is an op-ed piece in the New York Times today ("U.S. Aid Should Be Earned") by several high ranking Republicans (LORNE CRANER, BILL FRIST, KENNETH HACKETT and ALAN PATRICOF) that recommends support for the Millennium Challenge Corporation to the incoming Obama administration. The Corporation was a Bush administration creation, and it has had a very slow start.

The idea behind the Corporation was that it would give large amounts of foreign assistance in a form that was available to the recipient government for its allocation but only after that government had demonstrated to the U.S. government that it was likely to utilize the funds well -- that is that the recipient government had appropriate policies and adequate administrative capacity. While the idea sounds good, few governments had qualified for its funding and disbursements of funds have been very slow.

Remember that the creation of this corporation was part of a fragmentation of the foreign assistance program. USAID was placed under closer State Department control (but there was increased emphasis on funding non-governmental organizations as vehicles for bilateral aid, and on partnerships with the private sector which of course resulted in shared control), the Department of Defense was given charge of the large expenditures for conflict related foreign aid, a different bureau of the State Department continued its functions representing the United States with respect to the development assistance efforts of the United Nations programs and decentralized agencies, and the Department of the Treasury remained responsible for representing the United States with respect to the World Bank and other international financial institutions. Many observers have suggested that the Obama administration reorganize the foreign assistance bureaucracy, strengthening the international development expertise and improving coordination among the various elements of the program.

In considering such proposals, it is important to understand the purposes of U.S. foreign assistance. In general we do not seek to increase the rate of economic growth of recipient countries per se, but rather to provide humanitarian assistance or to help stabilize areas for political reasons. (We don't want to tax the American middle class to subsidize the rich in poor countries as they get richer.)

Unfortunately it is not always possible to be sure that foreign aid intended to stabilize Iraq, Afghanistan, the Israeli-Arab region, or other sensitive areas is used efficiently.

In the case of humanitarian aid, people who are suffering from natural disasters, communicable diseases, or hunger or in post-conflict conditions don't always (or usually) live in well governed countries which can quickly demonstrate that aid will be used efficiently and without corruption to benefit the poor. While this situation has been largely responsible for efforts to use non-governmental organizations and public-private partnerships to deliver aid, the resulting development of civil society probably is having significant benefits in the development of better governance. Civil society is an important element to keep business and government focused on the needs of the people.

Moveover, one of the most important purposes of bilateral assistance is to move poorly governed countries toward conditions under which they can more adequately meet the needs of their own populations, and especially the needs of the poor. The investments in human resource development and strengthening key institutions seem likely to be needed to achieve adequate governance. Thus an organization with the charter of the Millennium Development Corporation is unlikely to be able to achieve the humanitarian purposes demanded of U.S. foreign assistance by the public and the Congress.

I don't know how successful the Millennium Challenge Corporation has been or could be. I think it makes sense to have an arm of U.S. foreign assistance that provides assistance in the form of "block grants" to governments of target countries with demonstrated ability to use such funding well. However, it is also important to have programs that provide assistance to achieve U.S. policy objectives in other forms for other countries, and especially important to have an overall coordination among the various foreign assistance programs. It is also important to have a cadre of managers of the foreign aid program who understand both development and humanitarian assistance, with strong diplomatic skills, and ability to coordinate foreign aid with other foreign and domestic policy instruments.