POMED Notes: “Strategic Foreign Assistance Transitions: Enhancing U.S. Trade and Cooperation Relations with Middle-Income Countries”
On Wednesday, the Center for Strategic and International Studies (CSIS) held an event entitled “Strategic Foreign Assistance Transitions: Enhancing U.S. Trade and Cooperation Relations with Middle-Income Countries.” The discussion focused on addressing how the United States should go about adjusting the levels of its economic assistance to relatively prosperous nations. Senator Richard G. Lugar (R-IN) gave a keynote address before panelists Rodney Bent, director of the United Nations Information Office in Washington, Peggy Philbin, deputy director of U.S. Trade and Development Agency, Patrick Fine, vice president in the Department of Compact Operations at the Millennium Challenge Corporation, and Richard Bissell, executive director for policy and global affairs at the National Academy of Sciences, weighed in alongside moderator Daniel Runde, director of the Project on Prosperity and Development at CSIS.
For full event notes, continue reading below or click here for a PDF.
Senator Richard Lugar opened the discussion with a keynote speech. Lugar acknowledged the downturn of the global economy and the fact that many politicians “think we should stop all global development aid.” Others suggest only maintaining aid relationships with strategically-relevant states like Israel. However, Lugar noted, foreign assistance is a key component of U.S. security strategy. “If properly targeted, assistance can mitigate threats,” Lugar said. “Additionally, we diminish ourselves if we turn our back on the impoverished.” U.S. aid policy transitions require taking stock of whose economies have grown and improved. Efficiency and transparency are key parts of that process. Lugar concluded by pointing out that the U.S. government has invested billion in Brazil and India, so “it’s imperative that we continue programs with history.”
Richard Bissell explained that many countries we have historically supported with financial assistance have grown from “fourth world to second world nations.” So, Bissell asked, “how do we deal with success?” Does the administration cut off development aid or do we simply change the nature of our relationship with aid receivers? Bissell gave historic context for answering the question and described how, following World War I, Herbert Hoover organized huge amounts of relief for Europe. The U.S. government was in fact feeding 20-30 million people a day. However, in 1923, Hoover discovered that Russia was exporting wheat and immediately shut down all aid programs to the continent. In the subsequent decade, Europe’s economy collapsed. The point Bissell seemed to be making was that following through on assistance, changing its nature, transitioning from a one-sided relationship to a bilateral one is key to maintaining economic long-term economic success. So, Bissell wondered, what should new assistance programs look like? Obviously the strategic context would be important, but also creating mutually beneficial relationships. Bissell concluded saying that instead of creating a new USAID office focused on middle income countries, we should create a separate entity or foundation specifically for middle income assistance transitions.
Rodney Bent asserted that “foreign assistance is absolutely going to be constrained in the near future” and suggested that an aid transition might be most guaranteed to succeed if the government had no involvement at all. In fact, Bent said, partnerships could be created between large private companies and middle income countries that would successfully fill the gap the government’s absence would leave behind. Bent also stated that genuine partnerships seeking “sustained growth” would be best, emphasizing the importance of “humility” in relationship-building as well.
Peggy Philbin responded directly to Bent’s critical approach to government development programs. “Government isn’t always the answer but it can be part of the solution,” Philbin said. Middle income countries don’t want handouts, they want partnerships. Most such countries also want to improve their infrastructure and energy efficiency, a goal the United States shares with them. So, Philbin noted, the U.S. has plenty of opportunities to work with middle income countries for mutual benefit. We might provide technical expertise while they support our economy by purchasing our products. In a case study, the U.S. provided technical support that doubled the output of a refinery in Brazil and ultimately resulted in millions of dollars in sold U.S. exports.
Patrick Fine noted that the question of how to change assistance relationships only exists because previous U.S. investments have clearly made a real difference in the world. But, Fine said, it’s clear that the current environment represents a new global reality and “we need to rethink the way we will protect U.S. interests.” Additionally, “U.S. interests go way beyond trade relationships, so what would a transition look like?” Fine thinks that “post assistance development programs” would be best, but setting such programs up would necessitate the formation of “new institutions.”
During the question and answer session, moderator Daniel Runde asked the panel about the United States’ habit of providing aid to “strategic partners” that don’t necessarily have any need for cash. Rich Bissell said that although we might be guaranteed a seat for diplomacy with “strategic partners” without giving them assistance, the aid probably ensure the United States a “relevant” seat at the negotiating table. Patrick Fine weighed in, noting that often the aid programs continue regardless of on-the-ground realities due to “bureaucratic intertia.”