A Not So Indecent Proposal

Last week the White House Administration released the budget proposal for Fiscal Year 2015 (FY15). The proposal included a $700 million (1.4%) overall decrease in foreign assistance compared to the FY14 levels. Some assert this is the manifestation of the American public’s disapproval and disregard for foreign assistance and international development. In reality, however, the new budget demonstrates a continued commitment to foreign assistance and the Obama Administration’s reprioritizing of development goals.

imgresThe overall decrease in aid is largely due to America’s reduced presence in Afghanistan and Pakistan, whose operations formerly made up large parts of the US foreign aid budget. The new budget would not entirely remove aid to these countries, but would remove several on the ground operations focused on post-conflict reconstruction. The country would not necessarily lose its direct monetary assistance from the US, but would lose its technical assistance in infrastructure rebuilding. The decrease in US technical assistance equates to a high monetary loss for each country and makes it appear as though the US is scaling back its overall foreign assistance program. Rather, the US is maintaining its overall monetary assistance but decreasing its capital assistance in certain countries.

The dire picture many paint of the FY15 budget ignores the many strategic aid increases the Obama Administration proposes. The FY15 budget proposal would increase funding for the US Trade and Development Agency (USTDA) by 22%. This agency’s purpose in foreign assistance is to connect American companies with infrastructure investment opportunities in developing nations. By increasing funding for USTDA, the Obama Administration seems to be encouraging the development of public-private partnerships between US private companies and developing countries. This demonstrates not only a shift in America’s approach to foreign aid but also demonstrates the government’s recognition of the large role private corporations could play in the future of development.

imagesThe proposal would also increase funding for the US Millennium Challenge Corporation (MCC), which focuses on aid for countries prioritized by the UN’s Millennium Development Goals (MDG). While overall funding may fall, the increased funding for the MCC demonstrates a stronger commitment to UN development initiatives. The proposal suggests that the US is beginning to prioritize not only its own development interests but global development issues as well.

What does Obama’s budget proposal indicate about his views for the future of US foreign aid? The budget demonstrates a shift in foreign aid priorities. Previously, US foreign aid focused heavily on infrastructure improvements and post-conflict rebuilding. America was especially involved in rebuilding war torn countries in the Middle East. Just look at Afghanistan or Pakistan or Syria as examples. But with a decrease in technical aid towards those countries and an increase in funding to the USTDA, Obama seems to be outsourcing infrastructure reconstruction to private companies. The administration would instead have the US government prioritize economic development. This becomes especially apparent when also considering the increased funding for the MCC. The MCC and the UN’s MDGs focus more on economic and community development in addition to overall capacity building.

This is an interesting approach to foreign aid because Obama appears to be taking advantage of the growing role of private companies in development. Development is no longer just for DAC donors or federal governments. Public-private partnerships have the potential to transform and improve foreign assistance. Using Obama’s strategy, if the private sector focuses on infrastructure development that leaves the US government free to prioritize economic development.

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