I have been honored to work with such a fine group of people who are doing important research on difficult issues.  During just ten years in existence, CGD has had major impacts on how the United States engages with the rest of the world on global development issues.  I look forward to watching its next decade of work.

I am proud of the work we’ve done in the Rethinking program.  From nudging the administration to live up to its commitments made in the President’s Policy Directive on Global Development and the Quadrennial Diplomacy and Development Review to our tracking of special initiatives to our work on the USAID Monitor, I hope that we have filled a gap in existing analysis.  It has been a delight to work with the many groups and individuals who care about these issues.

I leave with mixed feelings – a bit of sadness to not be involved in the day-to-day work of monitoring U.S. assistance programs, but also with much excitement to embark on several independent projects.

I also leave knowing that the program will be in the able hands of Sarah Jane Staats who will assume leadership of Rethink in June.  Together with the talented Casey Dunning and Will McKitterick, I am certain of its continued success.

Best.

The potential end-of-year train wreck will be caused by the very large differences among White House, Senate, and House budgets.  The House adopted a budget resolution that is $19 billion less than the Senate’s.  In terms of the international affairs budget, this means that the House is operating with a $40.1 billion base allocation while the Senate comes in at $49.8 billion.  That’s a nearly 20 percent difference.  (Ouch.)

At these levels, it will be very difficult for the State Department and USAID to effectively run their foreign affairs portfolios, not just because of the stark spending cuts but also because of the numerous restrictions, directives, and earmarks that reduce agency flexibility.  I say this as a believer that the budget can be reoriented to accommodate cuts and improve effectiveness, but also as an advocate of greater flexibility and less micro-managing.

But what about OCO, you ask?  The Overseas Contingency Operations request was designed to accommodate temporary and extraordinary expenses related to operations in Afghanistan, Pakistan, and Iraq.  Last year’s potential budget disaster was ameliorated because appropriators shifted some base funding to OCO, which by the way, doesn’t count against spending caps.

So what did the House Committee do with OCO for 2013?  It fully funded the Administration’s request of $8.2 billion.  Of course, House appropriators rearranged what gets funded in OCO, cutting in half the amount for State Department operations and ESF funding, while increasing amounts for USAID operating expenses, international organizations, disaster assistance, transition initiatives, migration aid, and security assistance.  The problem?  As I’ve discussed before, a dangerous precedent is set if some of this money isn’t truly temporary and extraordinary.  When the time comes to put this money back in the base, there could be justified resistance.

But there’s another problem with how 2013 will play out.  While the House agreed to $8.2 billion for OCO, the Senate’s allocation is just $3.2 billion.  This is one of the reasons that the House’s base budget is so much lower than the Senate’s.  (Combining the base and OCO, the House number is still about 9 percent less than the Senate.)

The difficulty will come as the two chambers try to reconcile these differences.  We’ll know a little more next week when the Senate panel marks-up.  Don’t expect this to sort itself out prior to the elections.  This will be end-of-year calculus with way too many variables, including who wins the White House, and which party controls the House and Senate.  And then there’s the threat of sequestration.

So what does all this mean for development?  When the budget doesn’t get completed by the beginning of the fiscal year, the release of those funds is delayed and the period in which they must be spent is compressed.  As agencies struggle to ship the money out the door, I can’t help but think that some due diligence in oversight might be sidestepped.  The future of programs and projects in the field are left dangling and the United States is not seen as a reliable partner.

And don’t get me started on the hilarity of the U.S. focus on governance…

Budget concerns will almost certainly put downward pressure on federal spending across a host of government programs for a number of years.  Although some think it is almost heretical to point out the obvious, the international affairs budget will not be immune from this dynamic. In fact, international spending could take a disproportionate hit compared to domestic spending – despite the fact that discretionary international spending is a very small part of the overall budget puzzle.

International affairs, and more specifically foreign assistance, have rarely been popular budget items among the public or on Capitol Hill – despite consistently comprising only about 1 percent of the total federal budget.  Even so, foreign aid and international engagement make good political targets for elected officials out on the stump. It is far easier to demonize foreign aid than to explain how relatively modest programs to improve living standards in the developing world have consistently proven to be in the national interest over the long-term.

The central question then becomes how do we maintain U.S. global leadership in development and improve the effectiveness and efficiency of aid programs at a time when the international affairs budget is surrounded by so much uncertainty?

Last fall, we set up a bipartisan working group to think through this question and look at how to reorient the international affairs budget during this current period of austerity. The resulting report, Engagement Amid Austerity, is now available.

This report outlines four big ideas as a framework for reorienting the foreign affairs budget:

• Be more selective and focused on what types of economic and security assistance are provided to which countries.
• Put PEPFAR programs in upper middle income countries on an increased cost-sharing trajectory.
• Reform U.S. food assistance programs by eliminating monetization, cargo preference, and allowing more local and regional purchase of emergency food aid.
• Create an International Affairs Realignment Commission to examine and redesign programs and architecture.

While we are not advocating for cuts to the foreign affairs budget, it is abundantly clear that the United States is spread far too thinly in its assistance programs. The United States currently provides economic assistance to 103 countries and security assistance to 143 countries.  U.S. assistance programs are trying to do too many things in too many places without clear objectives.  In addition, the United States continues to provide aid to far too many countries that are simply poor partners. If a country’s leadership is unwilling to embrace reform, democracy, and more open markets, there is little reason to think that U.S. aid programs will make much of a difference over the long haul.

We believe that programs can be better focused for greater impact.  In short, we should be directing more resources into fewer countries. Such a footprint would be far easier to manage, entail fewer operational costs, and help shape countries into partners that no longer require U.S. assistance five to ten years from now. Based on a data-informed process assessing a country’s need, capacity, governance, and commitment to development, as well as subjective judgments, our report rates every single one of the 146 countries receiving U.S. assistance as to the likelihood that U.S. aid will be effective. We recommend focusing economic assistance in 53 countries, and focusing security aid in 72 countries.

Others may reach alternative conclusions using this same data, and we have provided as much information to readers as possible so that they can do so.  We do not expect universal agreement about our conclusions. But amid all the debates that will take place over the next year on how much we spend on international affairs programs, it is equally vital to engage in an overdue conversation on how we spend it.

The report is timely for two reasons.  First, it is anticipated that food security will be a topic of discussion at the upcoming G-8 meeting at Camp David.  With budget austerity gripping the attention of most international donors, it will be interesting to see if commitments to food security will be maintained and whether outstanding pledges will be filled.

Secondly, the administration’s Feed the Future initiative is now two years old.  This is old enough to be assessed from a policy coherence and implementation perspective; not sufficient time for impact evaluations relating to farm yield, availability of nutritional foods, access to credit, increases in income, among others, as the report duly notes.

The report gives high marks to leadership from the State Department, USAID, and MCC, and good marks to Congress and USDA, but calls on all of them to up their game in the face of global challenges and funding issues at home.  A fair degree of the high grades are attributed to steady increases in funding for agriculture and food security, momentum that could come to a screeching halt if recommendations of the House Budget Committee are adopted.

While it has been on the Rethink agenda to do a progress report on Feed the Future, I would offer the following thoughts, some raised in the Chicago Council report and others not.

• Feed the Future was the first explicit endorsement of a whole-of-government approach.  While it is helpful to assess the performance of each individual government agency, there is a clear gap in assessing whether the whole-of-government approach enhances performance overall or is more of a hindrance to getting the job done.  Coordination is never easy among bureaucracies, but I’m hearing there are still some inter-agency food fights and duplicative efforts both in DC and the field.
• Food security depends on more than just raising farm yield, and as the report rightly notes, the U.S. government has neglected to invest more in research, education, and extension.  Feed the Future has a research strategy, but building the educational capacity of universities in Sub-Saharan Africa and South Asia is not a very strong component.  I’m not talking about the feel good 3-week study trips bringing over African academics and government officials to tour US farms and universities.  I’m talking about building the institutional capacity of those universities to produce agronomists, biologists, veterinarians, agricultural economists, nutritionists, and the other academic specialties that are needed to generate their own solutions to local challenges.  It is well understood that the current state of universities in Africa are good at producing bureaucrats.  Scientists and extension agents?  Not so much.
• The administration may have missed the window to get legislation authorizing a food security program when it walked away from the Lugar-Casey Global Food Security Act of 2009. (Disclosure: I led the team that wrote the legislation so I am clearly biased.)  Even if this decision is reversed, legislation would not be possible until next year given the election calendar.  Even then, it would depend on the political dynamic coming out of the election results.  Legislation is important because it helps to solidify continuing congressional support across administrations.
• Without congressional buy-in, funding over the long-term is vulnerable.  Aid for agriculture, just one component of a food security strategy, has shown a high degree of volatility over several decades. Such inconsistency can undermine previous gains and in the end is an inefficient use of funds.
• Part of overcoming budget concerns is to improve the effectiveness and efficiency of aid dollars.  A good start, highlighted in the Chicago Council report, is to reform food aid programs, such as eliminating monetization and expanding local and regional purchase.

Moving the nearly 925 million people who suffer from chronic malnourishment into the food secure category will take time and perseverance among countries working in partnerships.  It will also take the studied attention of organizations like the Chicago Council to keep asking the right questions.

Here at CGD, my colleagues are doing the same. For more of our work on food security and assistance, see Vijaya Ramachandran’s working group on food security and the Rome-Based agencies and her work on hedging strategies, Kim Elliott’s working paper on innovative funding mechanisms for agriculture investment, or Amanda Glassman’s work on cash transfer programs and improved nutrition.

First, a little background.  P.L. 480, or Food for Peace, is the largest program funded annually at about $1.5 billion on average.  Although it is not well understood outside of budget wonk circles, U.S. food aid is part of the international affairs budget but is authorized and appropriated by the agriculture committees.  (The House committees have some shared jurisdiction with the foreign affairs committees.)  This structure goes back to a time when the United States used international food aid programs to distribute an abundance of surplus crops.

The Farm Bill largely authorizes domestic farm-related programs ranging from crop subsidies to food stamps to trade promotion activities.  Congress re-authorizes farm programs about every four to five years. It should come as no surprise that it is a difficult bill to pass in any political environment; it is even more difficult in the hyper-partisanship of an election year.

On Friday, the Senate Agriculture Committee released the “chairman’s mark”, or the starting point for the Committee’s deliberations on the bill.  The Committee will mark-up the bill this Wednesday.  Kudos are definitely in order for a draft bill that advances ideas around improving food aid effectiveness.  The draft includes the reauthorization of local and regional purchase (LRP) to buy food closer to emergencies, thus avoiding higher costs and delays that have become a hallmark of U.S. food aid.  The previous farm bill had included a pilot program at about $15 million a year to test the feasibility of LRP (even though USAID already has authority to do a large amount of LRP).  Advocates would prefer an amount larger than the $40 million in the draft, but this is movement in the right direction.

The bill also tackles the practice of monetization whereby food aid commodities are sold in developing country markets by implementing partners in order to fund their development activities as well as their food aid distribution costs.  The GAO found that $219 million in food aid resources were lost between 2008 and 2010 as a result of low-cost-recovery rates (58% for USDA and 76% for USAID).  The draft bill requires that monetization be used only where there is a 70% cost recovery.  While this doesn’t end the practice, at least it starts to set some parameters and expectations for better efficiencies.

These reforms don’t go as far as I would like.  I would prefer the nature of the food emergency to determine whether U.S. commodities or LRP is used rather than some formula that makes more sense for Washington politics than for global hunger. Increasing incentives for agricultural innovation (see here) or using cash transfer programs (see here) could be extremely efficient and effective new ways to fight hunger. And eliminating both cargo preference and monetization (see here) would allow every food dollar to go about 30 percent further and produce estimated savings of roughly $260 to $400 million annually.

It is still a long road to passage, and reforms often take time.  I commend the Committee for taking a serious look at improving food aid efficiencies and hope that this marks the start of a productive process of policy reform.

Many of the recommendations are ill-advised if the United States is to remain influential in world affairs, such as eliminating the Complex Crisis Fund, zeroing out funds to organizations like the African Development Foundation or Inter-American Foundation, or reducing public diplomacy programs.

Perhaps the oddest and most counter-productive recommendation is to eliminate Feed the Future but continue U.S. food aid, also known as PL 480, in its stead.  Feed the Future is the manifestation of the Obama administration’s emphasis on global food security begun in the last year of the Bush administration when funding for agriculture productivity activities was steeply increased.  This increase in focus on food insecurity came about because of food price fluctuations in 2007 and 2008 that pushed the number of people living in poverty to above the one billion mark.

The Committee asserts that Feed the Future is no longer necessary and that PL 480, also known as Food for Peace and the McGovern-Dole school feeding program, provides all the agriculture funding that’s needed.  Huh? PL480 is not a long-term program to promote food security. The majority of its funds are for humanitarian responses to acute and chronic problems with regard to food availability and access. It is a “feed the now” rather than a “feed the future” approach.  Its goal is to keep people alive, not to increase farm yield or any of the related activities necessary to help develop sustainable agriculture. Instead much of PL480 funding goes to the World Food Program to provide food in emergencies around the world, or gets monetized – sold by NGOs to pay for small-scale agriculture projects.

It also boggles the mind that the Budget Committee would emphasize programs that are widely recognized as having serious efficiency problems.  As John Norris and I have previously written, our food aid programs are some of the most inefficient in government.  Because U.S. law requires that food be purchased in the United States and shipped on U.S.-flagged vessels, the transaction costs eat away at roughly one-third of the funding.  These laws also apply to assistance that is monetized.

Feed the Future is largely funded from USAID’s Development Assistance (DA) account.  The Committee recommends eliminating DA and consolidating its funding with the Millennium Challenge Corporation.  Just under 29 percent of MCC expenditures have gone to agriculture activities, and initial reports are positive with regard to outcomes.  But, the MCC is a specialized agency that’s focus cannot singularly be food security.  This is particularly true because countries chosen for MCC compacts are the ones to design the compact’s components according to the MCC’s well-known emphasis on country ownership.

There are better ways to find savings in the international affairs account that will not undermine U.S. global leadership. To that end, John Norris at the Center for American Progress and I formed a working group to prioritize the international affairs budget amid austerity. We have identified priorities that represent sound investments on development and national interest grounds, as well as areas in which funding should be ended or curtailed. Our cost savings are significant but would not cripple U.S. global engagement. We also identify those areas that should be protected from cuts, such as operating expenses and training.

At the same time as cuts are identified, we also focus on three areas of U.S. comparative advantage – those areas in which the United States has expertise, experience, and adequate funding to really make an impact.  It should not be surprising that food security, together with health and humanitarian response, are where we think the focus should be.

The Ryan budget would allocate $43.1 billion for the international affairs budget in 2013, down from the Committee’s estimate of $47.8 billion for fiscal year 2012.  This is nearly a 10% reduction.  Government-wide spending would total $1.028 trillion, or $19 billion below the spending cap imposed by the Budget Control Act.  While the House may approve the lower number, Senate leaders have stated their plan to keep with the higher number, a figure that will still exert strong downward spending across nearly all budget functions.  This will greatly complicate the work of the Appropriations Committees since both House and Senate appropriators will be working with different allocations.

Putting aside issues of politics and process for the moment, the Ryan budget signals a disregard for the value of diplomacy and development to promote and protect U.S. interests abroad.  By contrast, the national defense budget comes away flat-lined, but represents a significant increase from the president’s FY2013 request. This is despite the fact that successive National Security Strategies have asserted the equal value of defense, diplomacy and development (see here and here), a balance reconfirmed by the Quadrennial Diplomacy and Development Review.

This is not to say that funding for diplomacy and development should be equal to defense as the two missions and their associated costs are different.  I am also not claiming that international affairs should be immune from cuts, but there is certainly room for a more thoughtful and thorough review of spending.  I have long advocated linking aid to better defined purposes and greater selectivity.

It seems reasonable to conclude that some degree of cuts to international affairs will occur in FY2013 and beyond.  The goal then should be to reorient the budget in ways that maintain U.S. global leadership rather than setting an arbitrary funding level that is seemingly divorced from U.S. interests.  Reorienting aid programs by being more selective in where the U.S. makes investments and more focused on achieving well-defined and achievable goals is a good starting point.

To that end, John Norris at the Center for American Progress and I formed a working group to prioritize the international affairs budget amid austerity.  We have identified priority countries that represent sound investments on both development and national interest grounds, as well as those countries in which aid should be ended or curtailed.  Our cost savings are significant but would not cripple U.S. global engagement.  We also identify those areas that should be protected from cuts, such as operating expenses and training.

For a preview, John and I discuss the upcoming report here.  Stay tuned for its release mid-April.

With budget austerity driving much of the political discourse over the last year, many in the development community were concerned with what the numbers would look like.  Others, myself included, have been less concerned about the top-line numbers, and more concerned about how those funds are spent, even forming a working group to tackle the issue.  Instead of spreading aid money around to far too many recipients, I have been advocating for better focus in what we do in order to have the greatest development impact.

The trap that people fall into is to judge a budget based largely on whether the funding they care about goes up or down from the previous year.  Rather, budgets should be judged on whether the resources are allocated in ways that match objectives and in places where a successful outcome is more probable.

So let’s get the numbers out of the way.  The international affairs budget comes in at $56 billion, an increase of $1.3 billion or 2.4 percent more than 2012.  Foreign Operations, where the aid accounts are funded, would be allocated pretty much the same as the previous year — $36.2 billion compared to $36.1 billion in 2012.

Some items will likely generate concern and even organized pushback.

• Overseas Contingency Operations (OCO):  Is Temporary the New Permanent? The OCO request for international affairs was introduced last year to fund temporary and extraordinary costs of activities in the front line states of Afghanistan, Pakistan, and Iraq. These funds, just like the old fashioned emergency supplemental, do not count against budget caps.  Congress, knowing a good work-around when they see one, shifted roughly $3 billion from the base budget to OCO in 2012 in order to maintain overall funding levels similar to the previous year.

The administration rightly scaled back the OCO request from $11.2 billion in 2012 to $8.2 billion in 2013.  I will not put all the blame on Congress; there may have been some winks exchanged between the Appropriations committees and administration budgeteers, even as they recognized the danger of putting too much base funding into the temporary and extraordinary column.  Of course, this fear is predicated on the assumption that OCO will disappear at some point in the future, leaving shortages in the base.  But this may be a faulty assumption.  Just as supplemental funding bills that were supposed to be infrequent and in response to truly unanticipated needs became institutionalized on an annual basis, so too could the OCO mechanism.  But as my friend Gordon Adams notes with regard to the Pentagon’s OCO, using off-budget strategies does not contribute to reduced spending.

• A New Middle East Fund Responds to Arab Spring but Has Few Specifics. The administration proposes a new account – the Middle East and North Africa (MENA) Incentive Fund – with a $770 million pot. When Arab Spring demonstrations broke out last year, the administration found itself unable to deploy resources nimbly.  The new fund would tie assistance to democratic, institutional, and economic reforms.  Congress will likely have many questions about MENA since $700 million of the fund is currently undesignated.  Congress loathes the sight of big pots of money that remain unobligated for too long.  The administration will need to convince Congress that it will be consulted on allocations if Congress is to be able to resist the impulse to heavily earmark the fund.

• Decrease in Health Funding Will Generate Pushback.  Global health funding would decline by 3.8 percent in 2013, but the account still dwarfs any other economic assistance fund.  Health funding has mushroomed six-fold since 2001 with the President’s Emergency Program for AIDS Relief (PEPFAR) a driving force.  The budget request proposes to capture the efficiencies of generic drugs, cheaper shipping costs, and greater use of nurses and community health workers.  These and other efficiencies have reduced the PEPFAR per person treatment costs from $1,100 to $335.  The administration believes that it will still be on track to fulfill the President’s pledge to support six million people on ARTs by the end of 2013. The budget also proposes to contribute $1.65 billion to the Global Fund to Fight AIDS, Tuberculosis, and Malaria, a 27 percent increase from 2012.  This amount would fulfill the U.S. pledge of $4 billion by 2013.

However, this increase and the slightly reduced top-line health number will put a squeeze on some bilateral programs, and this will activate health advocates to lobby Congress for higher numbers.  Scaling back PEPFAR dollars in some countries may be justified on the basis of absorptive capacity, transferring some costs to recipient countries, and considering where other resources are available.  Focusing resources where PEPFAR can have the most significant impact is a good thing.

• AEECA Declared a Success and Eliminated….Kinda. The AEECA account (Assistance to Europe, Eurasia, and Central Asia) is zeroed out, but that does not translate to a $630 million savings.  AEECA funds will be mainlined back into the Economic Support Fund (ESF), Global Health, and International Narcotics Control and Law Enforcement (INCLE) accounts which represent the type of programs that had been funded.  AEECA replaced two earlier accounts targeted at Eastern Europe and the former Soviet republics soon after the dissolution of the Soviet Union.  This account was ripe for elimination (see my recommendation here).  Kudos for the administration for doing it.  The next step is to more closely look at many former AEECA countries to reorient the aid relationship given their record of growth and stability. While the budget proposes spending 18% less on AEECA countries, this region presents opportunities for greater savings.

There’s plenty more in the budget to talk about, and the Rethink team will have a fuller analysis out soon.  In the meantime, feel free to give us your perspectives.

Last year’s budget request showed some moderate progress in zeroing out development assistance in a small number of countries and closing aid missions in Guyana, Montenegro, and Panama.  There’s plenty more work to do, but I am hearing that the 2013 budget will not show much more progress.

Here’s the state of U.S. aid with regard to selectivity and focus.  Economic assistance, including the major health, development, and humanitarian response accounts, went to 102 countries in FY2011.  One country – Afghanistan – accounted for about 10% of the total.  The top 15 recipients accounted for 40% of the total, leaving roughly $12 billion to be distributed to 88 countries.

Very small sums were allocated to countries like Belize ($20,000) and Micronesia ($490,000), which begs the question of whether aid administrative costs justify these small amounts.  There is also little correlation of aid to population.  On a per capita basis, the U.S. spends $31 in Swaziland and $16 in East Timor compared to $6 in Ethiopia.

Program objectives, or sectors, are wide-ranging and do not reflect where the United States may have any comparative advantage.  Presidential initiatives, such as Feed the Future and the Global Health Initiative, demonstrate some focus within their sectors, but are not being used to provide any leverage on selecting aid recipients.  Feed the Future includes 20 priority countries, although similar types of aid are provided to many more.  The GHI recently jumped from 8 to 29 focus countries with little justification for why.  GHI includes wealthier countries like Georgia and Ukraine, but not the very needy, like Haiti.  It’s in Guatemala, but not neighboring El Salvador.

Will the 2013 budget show much selectivity and focus?  Given continuing budget pressures, the administration needs to demonstrate that it is focusing on “on high-priority, high-impact activities” as Administrator Shah wrote in a post-Busan letter.

After a cut of nearly 12% from 2010 to 2011, last year’s 2012 foreign operations budget actually increased.  However, this was done by moving some funding to the Overseas Contingency Operations (OCO) account which doesn’t count against budget caps.  A continued reliance on OCO will complicate future budgets and sets a risky precedent for future international affairs budgets.

While the 2012 budget dodged a proverbial bullet, there are no guarantees for 2013.  Budget austerity will continue to dominate the political process, putting downward pressure on foreign affairs budgets.  Because the Deficit Reduction Super Committee was unable to reach a deal, the international affairs budget goes from the security budget category to non-security. That means State and Foreign Operations goes from competing against defense for dollars to competing against domestic programs.

Squaring the two competing needs for cost savings and effective global engagement is not easy.  But unless the administration shows leadership in doing so, it will be left to a Congress that is far less enamored with the value of foreign assistance (and is facing an election year in which the majority of the Senate hangs in the balance).

For the 2013 budget, aid selectivity has to be a top priority and the Rethink team is contributing to the selectivity and focus debate through our CGD-CAP working group on aid priorities in a time of budget austerity.  If you have ideas to make aid more effective and reduce costs, send us an email with your comments and thoughts at aidpriorities@cgdev.org.

While the jury is out on its ultimate effectiveness, the lack of a strategy and guidelines for U.S. trilateral activities threaten to derail the approach before it can be evaluated.  USAID’s regional bureaus are leading much of the current work but the agency has been late in offering agency-wide guidance.  My understanding is that PPL has started a process to learn from some of the existing trilateral efforts, but I would urge them to give greater consideration to figuring out just where it would be most effective and why it would trump traditional bilateral assistance in some instances.

The lack of clarity has produced opposition to the concept, most recently in the form of an amendment to the House Foreign Relations Authorization that prohibits trilateral assistance with South Africa.  Even though the bill has not become law, the debate signals a deep wariness.

Judging from debate on the issue during the bill’s markup, there are legitimate concerns and a fair amount of misinformation that could be allayed with the development of a Trilateral Strategy.  The following congressional concerns demonstrate how critical it is for USAID to assume leadership in this area.

• It is simply a pass-through of money for what should be done bilaterally.
• The United States loses its branding and therefore gets no credit.
• The United States loses control over where the money goes.
• The United States loses oversight of the use of funds.

If trilateralism is designed well, none of the points above should even arise.  On the first point, trilateral aid should never be used or seen as a pass-through.  The politics of aid will not allow a funding channel to be used to bypass U.S. laws or regulations.  Transparency is always the preferred route.

Second, there is no reason why the United States needs to lose its branding.  If designed as joint programs, U.S. branding would still be clear.

Third, there is also no reason for the United States to lose control or oversight of funds.  Programs would presumably be jointly developed with common objectives and strategies.  The oversight and evaluation of programs should not have to differ from traditional bilateral programs.

Putting aside these concerns, there are potential benefits that have not been well articulated.

Trilateral aid could be an effective way (and should be designed) to –

• Leverage the funding of emerging donors.  Using a joint fund to which both donors contribute could be a source of savings when foreign aid funding is under pressure at home.  There may also be efficiencies in the administration of programs as well.
• Standardize emerging donor aid in ways that conform to Paris/Accra/Busan principles. Countries like Brazil, India, and South Africa, as well as China and Russia, have been in the aid business for a number of years.  There has been a fair level of concern that their activities will further burden low income countries administratively and that how they do development may stray from internationally accepted principles.  Trilateral activities pose the opportunity to marry new actors with the current thinking on aid effectiveness.
• Capitalize on an existing partnership or architecture. In some instances, it may be cheaper to join an already existing partnership and help scale it up rather than create one anew. One could easily argue that there is little reason for U.S. institutions to re-invent the wheel.
• Take advantage of regional expertise or cultural affinities. There are top-notch science organizations and universities in Brazil, South Africa, and India that focus on, for example, local ecosystems.  That expertise may exceed what exists in the United States where the demand for a solution for that very localized problem may not merit a sufficient investment. 
• Facilitate engagement in difficult environments. There are places that are unreceptive to an American voice.  For example, some countries suspect that U.S. agricultural aid is a ploy to promote U.S. agro-business and genetically modified technologies; they may be less suspicious if the same or similar message comes from a neighbor.

Trilateral aid could offer plenty of advantages from cost-savings to greater effectiveness – if well-designed and better articulated.  If not, misinformed opponents will stop the approach even before it gets under way.  And that’s why USAID needs to develop a plan.

We at Rethink continue to search for ways to improve aid effectiveness, even with reduced resources.  This blog is a sampling of an upcoming CGD-CAP working group report that will provide recommendations on crafting a budget to maximize our foreign assistance spending while identifying areas for lesser priority and funding. Look forward to a series of sneak previews to come highlighting some of the big ideas from the project. If you would like to contribute ideas for the CGD-CAP working group, please email us at aidpriorities@cgdev.org.