The President’s budget is scheduled for release on February 13. Many of us will be looking to see if the budget numbers back up some of the administration’s rhetoric. The elevation of development and the call to be more selective and focused in the use of foreign assistance funds are two in which I’m particularly interested. Both were called for in the President’s Policy Directive on Global Development.
Last year’s budget request showed some moderate progress in zeroing out development assistance in a small number of countries and closing aid missions in Guyana, Montenegro, and Panama. There’s plenty more work to do, but I am hearing that the 2013 budget will not show much more progress.
Here’s the state of U.S. aid with regard to selectivity and focus. Economic assistance, including the major health, development, and humanitarian response accounts, went to 102 countries in FY2011. One country – Afghanistan – accounted for about 10% of the total. The top 15 recipients accounted for 40% of the total, leaving roughly $12 billion to be distributed to 88 countries.
Very small sums were allocated to countries like Belize ($20,000) and Micronesia ($490,000), which begs the question of whether aid administrative costs justify these small amounts. There is also little correlation of aid to population. On a per capita basis, the U.S. spends $31 in Swaziland and $16 in East Timor compared to $6 in Ethiopia.
Program objectives, or sectors, are wide-ranging and do not reflect where the United States may have any comparative advantage. Presidential initiatives, such as Feed the Future and the Global Health Initiative, demonstrate some focus within their sectors, but are not being used to provide any leverage on selecting aid recipients. Feed the Future includes 20 priority countries, although similar types of aid are provided to many more. The GHI recently jumped from 8 to 29 focus countries with little justification for why. GHI includes wealthier countries like Georgia and Ukraine, but not the very needy, like Haiti. It’s in Guatemala, but not neighboring El Salvador.
Will the 2013 budget show much selectivity and focus? Given continuing budget pressures, the administration needs to demonstrate that it is focusing on “on high-priority, high-impact activities” as Administrator Shah wrote in a post-Busan letter.
After a cut of nearly 12% from 2010 to 2011, last year’s 2012 foreign operations budget actually increased. However, this was done by moving some funding to the Overseas Contingency Operations (OCO) account which doesn’t count against budget caps. A continued reliance on OCO will complicate future budgets and sets a risky precedent for future international affairs budgets.
While the 2012 budget dodged a proverbial bullet, there are no guarantees for 2013. Budget austerity will continue to dominate the political process, putting downward pressure on foreign affairs budgets. Because the Deficit Reduction Super Committee was unable to reach a deal, the international affairs budget goes from the security budget category to non-security. That means State and Foreign Operations goes from competing against defense for dollars to competing against domestic programs.
Squaring the two competing needs for cost savings and effective global engagement is not easy. But unless the administration shows leadership in doing so, it will be left to a Congress that is far less enamored with the value of foreign assistance (and is facing an election year in which the majority of the Senate hangs in the balance).
For the 2013 budget, aid selectivity has to be a top priority and the Rethink team is contributing to the selectivity and focus debate through our CGD-CAP working group on aid priorities in a time of budget austerity. If you have ideas to make aid more effective and reduce costs, send us an email with your comments and thoughts at email@example.com.