Bush Foreign Aid Plan Needs Tweaking

A Bush administration foreign aid proposal has little chance of passing muster with Congress as is, but with a little tweaking, many think the program can do wonders for developing countries.

Of course, cash for the Millennium Challenge Account needs to be appropriated first. And then countries need to be singled out to receive the direct assistance.

President Bush devised the MCA to reward cash-strapped governments that try to root out corruption, boost civil rights, raise education and health standards and promote economic freedom. He first proposed the plan in a March 2002 address to the Inter-American Development Bank.

The money could be used for everything from expanding the fight against AIDS; bringing computer instruction to young professionals; assisting small businesses; or providing textbooks and training to students in Islamic and African countries.

President Bush wants $5 billion a year for the program beginning in fiscal 2006. A fraction of that would first be made available in fiscal year 2004. The cash comes on top of $10 billion that the United States gives annually to foreign development assistance programs.

"The MCA provides the opportunity to revitalize and redefine the foreign assistance strategy of the United States and to maximize the impact, effectiveness and coherence of our aid programs," Bob Laprade, director of the Children in Emergencies and Crisis Unit, told the House Foreign Operations Appropriations Subcommittee last week.

But while experts say the MCA is a good first start at revamping U.S. foreign aid policy, many aspects of the plan should be altered, particularly given that the plan calls for the creation of a new agency to oversee it.

"I think the biggest concern is how this program would be coordinated with other U.S. foreign aid programs," such as that of the U.S. Agency for International Development, said Steven Radelet, senior fellow at the Center for Global Development. "I think there's a major coordination issue and a risk this could create some fragmentation and confusion rather than coherence."

Laprade echoed that concern.

"We do have a concern that the MCA should be seen as one piece of the larger U.S. foreign assistance strategy puzzle," he said. "We need one strong foreign aid program where the best of both the MCA and USAID are combined … we should be using the MCA to improve our overall development program and not to replace it."

But USAID Administrator Andrew Nastios said the MCA won't cause any disconnect.

"To those who have questioned whether USAID feels threatened by the MCA, I would answer, to the contrary," Nastios told the Senate Foreign Relations Committee last month. "We welcome the MCA as the strongest possible commitment by the administration to making development a core element of our foreign policy."

The money may help spur countries to get their act together, but another issue is whether there will be enough money to fund it.

Between the current budget squeeze, accelerated tax cuts and a huge supplemental budget request coming from the White House for reconstructing Iraq, little money may be left for the president's three foreign aid proposals: his $15 billion global AIDS initiative, the MCA and existing programs.

Bush has promised the AIDS and MCA initiatives will be funded with new money.

"The question will be, obviously, when there's pressure from Congress to cut some of the numbers here, how hard he'll fight for it. That's where the rubber meets the road," Radelet said. "I think there will be a lot of difficulty in getting all these things through."

Experts say one problem that exists is that the administration has set criteria that could give a helping hand to the best performers, rather than the neediest.

Criteria countries must meet in order to receive funding include: ensuring civil liberties and political rights; establishing an effective government and rule of law; controlling corruption; boosting education spending and ensuring proper immunizations; enhancing the country's credit rating and lowering inflation; and establishing effective trade policy.

"I think where concerns arise in the community of development advocates, among potential recipient countries is that it does exclude large portions of the world's poorest countries," said Lael Brainard, senior fellow at the Brooking Institution. "It may be too narrow."

Another concern is whether eligibility requirements are too broad and that countries such as Egypt, Russia, Jordan, and Peru — all of which already get substantial foreign aid — will beat out needier countries.

"The too-broad corners is a question of the geopolitical creep — whether this is a way of getting some of our big aid recipients in there because of the budgetary environment," Brainard said.

Debate has also arisen over whether the United States should be giving money at all to nations with which it fundamentally disagrees if it means preserving its security.

"It depends on to what extent the countries are doing things that are really against us versus something maybe more mild where they're not supporting us as much as we'd like," Radelet said.

"There's a tradeoff on this, obviously. The U.S. needs to do what's in the United States' best interest," he said, and if countries aren't supportive of the MCA goals, "we shouldn't be providing funds to them."

The United States currently doesn't give handouts to countries that, for example, support terrorism, like Syria, or that severely violate human rights, like China and Libya.

Figuring out who qualifies for MCA money will be a little bit more tricky, since it's in the United States' best interest to be patient with countries and invest heavily in their democratic future, although their cooperation is currently limited. Turkey is such an example.

"There's shades of gray in between," Radelet said. But "the development of poor countries, I believe, is fundamentally in our interests. It helps create a stronger world."