Increasing aid effectiveness: harmonization is the key
Since the inception of the Marshall Plan post World War II, the United States has been one of the most active and generous aid donors to the developing world. Unfortunately, over the last few decades, our aid and trade policies have become increasingly fragmented and, at times, even contradictory. In order to increase aid effectiveness and best serve the interests of the U.S. and aid recipients, we must work towards harmonizing aid and trade policies towards developing and least developed countries.
The aid debate often centers around two primary approaches: increasing versus decreasing foreign assistance. However, as the recently released HELP Commission report has highlighted, we must also consider national aid harmonization. In order to ensure maximum impact for U.S. taxpayer’s investment, we must look beyond the stale aid budget questions and address harmonizing and rationalizing the U.S. aid system. The U.S. government currently has over 20 different agencies working on various foreign assistance-related issues. The U.S. has already begun streamlining efforts though through the establishment of coordinating bodies such as the “F Process” at the State Department and the HELP Commission; it is imperative these efforts continue to be explored. By finding ways to align these agencies we will be better positioned to effectively implement programs to the neediest countries.
In addition to working on harmonizing our national aid system, we must also work with foreign governments, multilateral agencies, and new aid mechanisms. Given that combined, the U.S. and E.U. contribute $4 our $5 USD of all official development assistance (ODA), we must carefully consider how best to also coordinate our aid efforts with Europe and other key stakeholders. Therefore, we must also coordinate with multilateral agencies such as the United Nations, World Bank, and new actors such as philanthropic organizations and public private partnerships such as the GAVI Fund.
Finally, in order to have a comprehensive policy towards the developing world and aid recipients in particular, we must carefully align our development assistance with our bi-lateral trade policies. Though we contribute foreign assistance to most developing countries, be it in Columbia or Egypt, we do not always find complementary trade policies to these aid recipients. We are, in effect, taxing the poor. For example, in Bangladesh, we contribute significant aid nationally, the amount of trade stifling export tariffs we collect from Bangladesh annually amounts to more than the total we invest in aid. Unfortunately, Bangladesh is among many such examples of misaligned aid and trade policies which must be remedied. In fact, poor countries like Bangladesh, Cambodia, Pakistan, and Mongolia suffer under some of the highest U.S. duty rates-on average - between 9% to 15% as compared to high-income countries, which only face a 0.9% duty. Through interagency coordination, in particular the Department of State, USAID, and USTR, we can work to effectively align our foreign policy in the U.S. as well as our implementation on the ground to accomplish a common objective.
Much has changed since George C. Marshall announced the launch of the U.S.-lead Marshall Plan to help rebuild post-war WW II Europe. Our foreign policies, globalization, and security priorities have all influenced our broad approach to engaging with the developing world. However, as a nation we have consistently continued to invest in rebuilding fragile states, promoting democracy, equality, civil society, and economic prosperity the world over. Not only to ensure our security, but also for the good of humankind, we must effectively continue this important work in the foreseeable future. By working towards a comprehensive foreign policy-such as the Marshall Plan-which accounts for aid, trade and security interests we will ensure that both aid donor and aid recipient goals are attained resulting in true partnerships.
April 24th, 2008 at 11:16 pm
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