The $10 billion gap between the House and Senate versions of the FY2014 foreign assistance bill suggests very little in the way of agreement between the chambers when it comes to the administration’s budget request. Yet, as CGD’s Jenny Ottenhoff reports, the House and Senate joined with the administration in a unified front in favor of global health funding, including a strong show of support for multilateralism in global health financing.
Specifically, both House and Senate bills met the administration’s request in support of a nearly $5 billion pledge to the Global Fund to Fight AIDS, TB and Malaria, marking a 25% increase over the previous US pledge, a remarkable jump in today’s budget environment.
As far as I’m concerned, the more multilateralism, the better when it comes to US foreign assistance. So, taken in isolation, I think the Global Fund increase is a positive step. What troubles me is this picture:
With little expectation that the administration’s latest IDA pledge (due this December) will rise, let alone increase by double digits, the Global Fund will surpass IDA as the single largest foreign assistance contribution the United States makes to a multilateral institution. In fact, the Global Fund contribution will be roughly equal to US funding for IDA and all of the regional development banks combined.
This shift is troubling because it suggests a stronger embrace of “multilateralism-lite” over core multilateralism. I define multilateralism-lite as a reliance on earmarking through multilateral channels, whether by sector or country. This approach tends to bring with it less financial leverage for the US assistance dollar (since few if any of these initiatives match the breadth of IDA’s donor base), weaker client country ownership (since sector initiatives are inherently donor-led efforts to direct funds to areas the donor has identified as a priority), and less coherence in terms of an overall multi-sector approach to poverty reduction and development.
It’s particularly interesting that House funders included direction that the US should not account for more than 1/3 of the Global Fund’s new pledges. Clearly, leveraging other donors’ money has been a compelling justification for multilateralism on the Hill, since this direction has been applied to new multilateral commitments in recent years.
And Congress is right to worry about weaker leverage with some of the newer, earmarked multilateral funds, something they haven’t had to worry about when it comes to contributions to the core multilateral institutions. Whereas a US pledge of $4 billion to the 2010 Global Fund replenishment leveraged a total financing package of just over $10 billion, the $4 billion pledge to IDA in the same year leveraged a total package of just under $50 billion.
Now, neither weaker leverage nor the other shortcomings of multilateralism-lite are necessarily fatal, nor do they call for an absolutist stance against any earmarking in our multilateralism. Disease eradication is a laudable objective for US development policy, as are some country-focused efforts. Indeed, as Nancy Birdsall and Alexis Sowa have argued, the US would do well to rely more on multilateral channels in challenging countries like Pakistan, an approach that would likely mean some additional earmarking beyond our core contributions to the World Bank and Asian Development Bank.
But multilateralism-lite rests on a foundation of core multilateralism. And the core is best encapsulated in the IDA model, both in size and approach, where the developing country works with the multilateral institution to define a broad-based, multi-sector development strategy and multilateral financing flows based on transparent performance criteria.
Even more troubling than the apparent decision by the administration to prioritize the Global Fund over IDA is the lack of a decision leading to this very outcome. As I noted in an earlier post, the key problem is the lack of a meaningful decision-making structure that considers all of the United States’ multilateral commitments together.
When the budget is growing, this fragmented decision making may not matter so much. A choice to go big on the Global Fund can be balanced by comparable increases for IDA and the regional development banks. Everybody wins!
In a tight budget environment however, not everybody wins, and effectively managing the tradeoffs demands overarching policy-level deliberation and some transparency around the policy choices that shaped the outcomes. When a move as consequential as the Global Fund-IDA shift occurs, at the very least, the United States owes it to developing countries and fellow donors (not to mention US taxpayers!) to offer a rationale and some evidence of deliberation over the matter.
Of course, it’s not just about an IDA-Global Fund tradeoff. All of the elements of the pie chart below should be part of a discussion of US multilateral priorities. In turn, multilateral funding generally should be considered against bilateral funding, just as the Global Fund increase resulted from a deliberate decision to increase the multilateral share of the US global health budget, the vast majority of which is bilateral.
Let me be clear, it isn’t just a matter of determining winners and losers in the budget wars. A comprehensive policy discussion around the United States’ contributions to multilateral institutions could help to better shape the institutions themselves and how they relate to each other. What lessons could the Global Fund take from IDA, and how might IDA better support goals around disease eradication? Could IDA move more toward global public goods without abandoning core principles of country ownership and performance based allocation of resources?
As the leading donor to many of these institutions and funds, the United States is in a uniquely powerful position to help guide such decisions, but the US needs to form a coherent view across the institutions before it can affect change within them.
As for first steps in this process, the US government would do well to look to the UK and a growing list of other donor governments that have conducted multilateral aid reviews. These reviews, aimed at assessing the effectiveness of the multilaterals as well as their alignment with the donors’ priorities, can have real muscle when, as in the UK, they have the backing of the politicians as a binding input into budget decisions.
In the end, maybe I have it wrong and an overarching deliberation across the US foreign assistance agencies would conclude that the Global Fund deserves more money than IDA and the regional development banks. But I would feel a lot better about the outcome knowing that it came from deliberate strategy.
 IDA, the African Development Fund, and the Asian Development Fund.