Amid the past months of chaos and disruption in US foreign aid, I've been having a lot of conversations about what comes next: how can we begin to think about rebuilding in a way that delivers development impact and builds a strong base of political support? During last month's meetings of the World Bank and IMF, I had one such conversation on stage at CGD.
You can watch the whole event here, but here are four things I took from the lively and productive discussion:
One: Programmatic sprawl and bureaucratic inertia created vulnerabilities, reducing impact and confusing the message.
CGD President Rachel Glennerster launched the event by sharing reflections from her time as chief economist at UK’s DFID and then FCDO, where she reviewed every project over £40 million ($50 million). She talked about how projects became so layered and complicated that they were hard to explain and hard to implement well. She argued for the radical simplification of aid programs, including focusing on big wins such as fully funding the rollout of malaria vaccines or implementing an evidence-based protocol for treating malnourished children, so that donors can more readily track outcomes and also tell a more compelling story about the impact of foreign aid.
This resonated with my own experience as USAID’s policy director, where we sought to leverage the same programs to deliver on multiple objectives, including gender equality, climate mitigation or adaptation, and democratic governance. In theory, this was possible, but in practice, it could easily lead to a lack of a clear theory of change and targets. Similarly, coordination among foreign assistance tools at different US government agencies is important; however, in the absence of streamlining processes and altering incentives, it can lead to a heavy burden on staff and programs without a commensurate increase in impact (best captured by Todd Moss’ reflections on the [w]hole of government).
Jim Richardson, who served in senior roles at both USAID and the State Department during the first Trump administration, spoke about efforts to make USAID more responsive and results-oriented, guided by a North Star of ending the need for foreign assistance. He described how the transformation process sought to align programs with each country’s stage of development. However, while there was traction within USAID, Richardson talked about the lack of flexibility from Congress to match levels and kinds of assistance, by sector and modality (e.g., grants, loans, technical assistance), with a country’s needs and trajectory.
As CGD colleagues Justin Sandefur and Charles Kenny found, USAID funded an incredible amount of life-saving work. They calculate that USAID funding saved approximately 3.3 million lives per year, even when accounting only for interventions with the greatest direct impact on saving lives (e.g., malaria and vaccine programs, but not water and sanitation or family planning programs). The lesson is not, therefore, that foreign aid is ineffective or wasteful, but rather that even more could be achieved by bringing greater focus and evidence to the table. And, where programs or sectors are inherently more complex and/or have less robust cost-effectiveness evidence or easy-to-measure, near-term targets (e.g., accountable governance, stabilization, digital development, economic growth), the premium on focus and clarity of purpose is even more significant.
Two: Foreign aid has always been anchored in national interest, but needs to be adaptive and agile to address a different geopolitical landscape.
USAID was founded during the Cold War under the theory, in the words of President Kennedy in 1961, to support nations in resisting “communist pressure” and even more fundamentally “to help make a historical demonstration that in the twentieth century, as in the nineteenth—in the southern half of the globe as in the north—economic growth and political democracy can develop hand in hand.”
Richardson echoed the core framing of connecting foreign assistance to American security, prosperity, and health. While US programs can and do help vulnerable populations, funding from the US government is driven by an assessment of US interests, unlike private charity. Similarly, Gyude Moore, the former Liberian Minister of Public Works and a non-resident fellow at CGD, highlighted the importance of making “direct connections between aid and how it benefits the average American.”
Overall, the panelists rejected the idea that there is a clear dichotomy between moral leadership and US national interests. Moral leadership, for example through providing needs-based humanitarian assistance and reducing human suffering, can build partnerships and trust that serve longer-term US strategic interests. Moore, for example, talked about how US support in rebuilding Liberia after the civil war and responding to the Ebola outbreak solidified a partnership that yielded diplomatic benefits over time. He also underscored the importance of identifying win-wins: for example, the Marshall Plan was both generosity to rebuild Europe after World War II and a means to finance European purchases of US food and other goods. Indeed, the Marshall Plan was a “strategic attempt to fend off aggression from the communist Soviet Union,” including by addressing shortages that were creating receptive audiences for communist organizers in France and Italy.
One of the key questions that I raised during the discussion is how to bring rigor to connecting foreign assistance to strategic interests, especially when the foreign policy conversation is often dominated by strategic competition with the People’s Republic of China (PRC). How do we make the case for enlightened self-interest across different types of programs, from humanitarian assistance to pandemic prevention to diversified supply chains? How do we build a framework that helps prioritize and make tradeoffs at a time of resource constraints and countries turning inward? Champions of US global development will need to resist the temptation to justify the same set of programs under the rubric of PRC strategic competition, mitigate the risks and potential for overreach, and make a robust case for investments that yield benefits over the longer-term.
Three: Partner governments should not only prepare to chart their development course with less foreign support, but also to come together and shape the future rules of the road.
The end of the American unipolar era is creating uncertainty and suffering, alongside new opportunities for leadership and leverage among low- and middle-income countries. Moore talked about how in the current context of retreat, “voice and agency changes for the receiving countries in terms of how they deal with USAID if it comes back or dealing with partners when they come back.” He highlighted how moving forward, partner countries “have to be significantly more assertive,” including rejecting projects if they don’t fit within the country’s own development and growth plans. Moore also raised the potential power of African countries negotiating together as a trade bloc with the US, including around critical minerals that are in high demand and abundant on the continent.
As Moore’s trade example suggests, the global order is changing and we don’t yet know what the future will hold. Many of the dramatic economic successes of recent decades, including South Korea and the PRC itself, were driven by export-led growth and access to US and other markets. New rounds of tariffs and industrial policies, largely spurred by the prior and current US administrations, are changing the growth and development landscape. Likewise, the rise of national populism in the US and Europe has upended migration regimes that filled domestic labor gaps and facilitated remittances and other benefits to origin countries like Honduras, the Philippines, and Vietnam.
Thus, while the decline of US foreign assistance deals a major blow, especially in sectors such as health and humanitarian assistance, the opportunities for collective action among low- and middle-income countries span a large spectrum. As Moore noted, the green transition and the digital and artificial intelligence boom have led to spiking demand for certain critical minerals. Demographic changes mean that more workers are and will be needed in advanced economies. To the extent US foreign aid is rebuilt, it should be done so with a focus on how it can leverage migration, trade, supply chain, and other trends for the mutual benefit of partner countries and the US and its allies. In this moment, partner countries can have more influence on the future rules of the road for global cooperation, especially if they find ways to collaborate and negotiate collectively.
Four: The future of foreign assistance is not yet written, and there is value in thinking about the long game.
Moore highlighted the value of the long game in reflecting on how it took a decade between the time CGD experts developed the ideas for a full-fledged US development finance agency and the expansion of Overseas Private Investment Corporation (OPIC) into the US International Development Finance Corporation (DFC) in 2018. Patience is hard in the midst of a crisis, but Moore urged the audience to remember that while the discussion “may not have a receptive audience in the current administration, but it prepares us for the right time, the right leadership.” And while there is no going back to the status quo ante, Richardson noted how in the first 100 days, the second Trump administration had not yet articulated its theory of change around foreign assistance. Doing so will take time, including conversations within the administration that unfold between proponents of global engagement and others who would largely turn inward. Likewise, Congress will need to engage more deeply through the appropriations and authorization processes in the next year.
The small dose of optimism I shared was this possibility: while it is easier to tear down than to build, perhaps rebuilding our international development capabilities will be easier than further attempts at incremental reform. As experts and advocates engage in the critical fight to preserve programs today, I am eager to have more conversations on the future of foreign assistance. Whatever shape the next global order takes, I hope development and humanitarian voices are at the table. If they are, the future promises to be more equitable, humane, and reflective of a robust, rather than narrow and short-term, set of strategic interests.
The author would like to thank Erin Collinson and Conor Savoy for helpful feedback.
