[ USA ]

Farewell to multilateralism

[ By Johannes Lehne ]

In the aftermath of September 11, 2001, the Bush administration has instituted a number of fundamental reforms to its development aid programme. On February 24, the introduction of the
USAID White Book concluded the initial phase of a plan to make development policy one of the three pillars of US national security policy. The new orientation is anchored politically and institutionally in the controversial National Security Strategy, the USAID and State Department’s Joint Strategic Plan, the White Book, the inception of the Millennium Challenge Corporation (MCC) and the Office of the Coordinator in the fight against HIV/Aids. The State Department is to coordinate all these activities.

In a bid to improve efficiency as well as foreign policy coherence and strategic management, US development policy will be limited to five main areas. These are:
– aid for “Transformation States” through the MCC or preparatory aid through USAID,
– stabilisation of Fragile States,
– support for states which are relevant for strategic reasons and for foreign affairs,
– humanitarian aid, and
– participation in solving global, transnational problems (HIV/Aids, international trade, international crime, drugs, illegal migration, etc).

These areas have been defined with respect to strategic and economic concerns. A core motivation is that fragile states are seen as breeding grounds, starting points and victims of terrorism, global crime networks, and weapons proliferation. Development policy is meant to contain this threat. The administration has demonstrated its priorities by increasing development funding by more than 300 percent – from 9.9 to more than 30 billion dollars – between 2000 and 2004. Approximately two thirds are earmarked exclusively for reconstruction in Afghanistan and Iraq.

Previously, criticism levelled at the USA by the OECD Development Assistance Committee (DAC), civic organisations, the World Bank and other donors had focused on:
– reducing development resources (lowest level 6.8 billion dollars in 1996),
– incoherent and isolated approaches which tied development cooperation and financial allocations to complicated and partly-contradictory targets, and
– inefficient implementation because of responsibilities being split among more than 36 different actors and institutions leading to long-winded agreement processes.

The US government has accepted at least some of this criticism. The US Congress increased funding for USAID from 7.8 billion (in 2000) to 10.2 billion dollars (in 2004). Supplementary budgets for Iraq and Afghanistan (20.4 billion) were adopted in October 2003. On top of this, the MCC (with a current budget of 3.5 billion dollars for 2004/5 and the promise of five billion dollars per year from 2006) and the HIV/AIDS initiative 15 billion dollars over the next 5 years) were started. Taking all this into account, the US budgeted expenditure for development is now increasing to over 30 billion dollars. Stronger agreement and the merging of all development activities in the State Department are intended to provide greater coherence.

Redrafting US development policy was principally motivated by domestic considerations. Both the Congress and the public have been assessing aid very critically for a long time. Cooperation must now produce concrete results in order to avoid more fine-tuning by the US legislators. Gallup/CCFR polls in 2001 showed that the majority of Americans (72 per cent) did support an increase in development aid, particularly for Africa and the fight against Aids. At the same time, however, 53 per cent considered corruption and mismanagement huge stumbling blocks.

Many aspects of this reform have been defined by conservative and neo-conservative think tanks. The Heritage Foundation, the American Enterprise Institute and the Center for Strategic and International Studies constantly point out what they see as the limited relevance of international development cooperation for political stability and economic growth, particularly in sub-Saharan Africa. They accuse previous practices of having failed to create stable governments and flourishing market economies. This explains why the debate on outcomes and accountability is gaining such momentum in the USA.

The (in its opinion) mediocre success of development policy in the past 30 years as well as domestic pressures have led the Bush administration to disregard the international consensus on the Millennium Development Goals. Expecting concrete results, the administration is following a new approach. It is meant to clearly define developing countries’ own responsibilities and, if necessary, to penalise failure. This is to be achieved with a combination of strict conditionality through the work of the Millennium Challenge Corporation and High Impact Adjustment Lending, a World Bank strategy for stabilising weak states and implementing basic reforms.

The MCC has, so far, selected 16 countries from Africa, Asia and Latin America. To do so, it applied World Bank criteria for economic development and NGO indicators on corruption (Transparency International), democracy and human rights (Freedom House). The chosen countries are now offered the opportunity of cooperation agreements designed to remove obstacles to wide-ranging economic development. Concrete, quantifiable targets must be part of the agreements and the results are subject to controls.

Firm roots in security policy, selective criteria and strict conditionalities imply that US development policy – though in principle receptive to working with other donors – rejects the multilateral consensus which sees the Millennium Development Goals as yardstick for success. This conflict is most clearly apparent in the US administration’s controversy with Professor Jeffrey Sachs. As UN adviser, Sachs lambastes donor countries, and particularly the US, for not making enough resources available to developing countries. He also bemoans cultural and political insensitivity. The administration, however, speaks of a lack of commitment on the part of the developing countries in terms, for instance, of creating favourable conditions for growth and stability. In this context, the administration refers to the decisions made in Monterrey, Mexico in 2002. US policy insists on recipient countries creating adequate conditions to guarantee the successful utilisation of additional development funds. In the American view, the MDGs do not reflect the developing countries’ responsibility towards the well-being of their populations. The administration does not see a conflict between granting conditional aid on the one hand, and foreign policy-based support of strategically important countries (such as Egypt or Pakistan) on the other. Security alliances are its priority.

So far, the approach of coupling results-based development cooperation to security policy has found bipartisan support. Both Democrats and Republicans have accepted the new policy. They have increased funds for the HIV/Aids programme to a billion dollars, more than the administration’s budget had asked for. Moreover, they have consented to making MCC resources available for several years, in order to avoid over-hasted allocation.

Non-government organisations display various reactions to the new initiatives. The development community generally welcomes the commitment of the Bush administration, and the MCC and HIV/AIDS initiatives are viewed in a positive light. However, people are critical of the Pentagon being involved in the reconstruction processes in Afghanistan and Iraq. NGOs are demanding that the high levels of aid be established for the long term, beyond the period of reconstruction in these countries. USAID’s loss of relevance is criticised, as is the fact that the administration is integrating development issues in its security and foreign policy.

Whether a possible Democratic administration will continue this policy after 2005 is unclear. Presidential candidate John Kerry has not yet commented on development issues. However, his call for international “burden-sharing” (in the context of involvement in Iraq and Afghanistan) and his criticism of President George W. Bush's budget deficit might indicate cuts in US expenditure. But institutional changes (such as the abolition of the MCC and/or the creation of a department of development) seem unlikely as the Republican dominance of Congress is expected to continue after the November 2004 elections.

The new approach by the USA will provoke much criticism from the elites in some developing countries and from anti-globalisation circles. However, the enormous financial appeal of its programme will also attract partners. Its insistence on quantifiable success must still stand the practical test.