George Ingram, Board Chair of Friends of Publish What You Fund, has delivered testimony to the Senate Subcommittee on State, Foreign Operations, and Related Programs on the Fiscal Year 2019 Appropriations for the State Department, USAID, and MCC. This testimony delivers the conclusions we made in our US Foreign Assistance Project

Background

Friends of Publish What You Fund is a U.S.-based non-profit organization, established in May 2015 with the objective of promoting aid transparency. Our particular focus is US transparency and accountability. We regularly work in partnership with a number of stakeholders with similar objectives, including our UK-based partner, Publish What You Fund.

With the release of President Trump’s FY ‘19 budget request, Publish What You Fund launched a research project to assess the potential impact of proposed cuts in one sector of importance in each of four countries: Nicaragua (civil society), Liberia (democracy & governance), Senegal (agriculture) and Cambodia (agriculture). Publish What You Fund staff visited each country and interviewed a range of stakeholders including representatives from the partner country, donors, implementers, and civil society.[1]

Overarching findings

While every case-study uncovered unique findings, there are five lessons that apply across the board.

1.Significant and sudden cuts can risk instability and reverse gains made through U.S. investments. A key principle of USAID Administrator Green’s tenure has been to help partner countries develop their own journey to self-reliance. All of the case studies show that sharp and sudden reductions would not only have adverse effects on the people our foreign assistance is supposed to help, but would also likely undermine previous U.S. achievements and investments. What becomes increasingly clear is that there is little – if any – strategy behind the proposed cuts to country budgets.

Liberia is a good example.  The U.S. – in part because of our special relationship with Liberia – has invested in building democracy and governance capacity following devastating years of civil war. Considerable progress has been made over the last ten years, with the country having just had the first peaceful transition between political parties in 73 years. But this important step comes with its own complications. The 2017 election brought a 60% turnover in the legislature and an overhaul of leadership in the ministries – all taking place during a period of economic fragility. Against this backdrop, the FY ‘19 budget proposes cutting democracy and governance work by 66%. Such cuts raise serious concerns among a range of stakeholders – this is a crucial time for Liberia and precisely the wrong time to reduce support.

2. Proposed cuts, even if rejected by Congress, still have a negative impact. The budget request, regardless of Congress’ final funding decisions, is making it significantly more difficult to maintain an effective use of funds. Budget uncertainty, combined with the slow release of FY ‘17 funds, resulted in some implementers having to slow program implementation – one organization highlighted that this went on for six months. The consequence has been reduced outputs for equal or similar running costs. Another organization spoke of having to lay off staff due to this uncertainty, only to then receive funding.

3. The U.S. is a respected leader among donors and cutting programs undermines this leadership role. The U.S. often serves as more than just another donor. It provides leadership in its development approach and typically focuses on pockets of poverty, job creation, and strengthening democratic movements. In Cambodia, for example, the US is considered the most influential donor in ensuring that the rights of the most vulnerable, including smallholder farmers, are not ignored in the face of larger-scale economic development.

4. The U.S. often fills a unique role that other donors cannot or will not match in the short-term. The exception is China. The U.S. tends to operate differently from other donors. Of our case study countries, this was most notable in Nicaragua, where the U.S. is the only donor able to operate free from government interference. The U.S. directly engages civil society to support grassroots democracy and accountability, as well as women’s rights. In the current Nicaraguan context – where democracy has been on a downward spiral under the Ortega government – the U.S. is seen as a lifeline to a range of pro-democracy and rights-based organizations. Despite this, the FY ‘19 budget proposes to eliminate all bilateral funds, which would force many organizations to close. As one interviewee stated: If these cuts are about hurting Ortega, then the strategy is flawed. Aid in Nicaragua is for the people. These cuts will make him stronger.

All four case studies found that other major OECD donors are unlikely to fill any short-term resource gap because of an inability to pivot established strategies and/or budgets. In Cambodia, neither the five major OECD donors interviewed nor the Cambodian government would be able to address the needed poverty reduction efforts. However, China is considered a likely candidate to fill any resource need – and its assistance will not work in the same way as the U.S.’. A number of civil society representatives and donors were concerned about the negative impact on the pro-reform movement in Cambodia.

5.Relatively small amounts of U.S. foreign assistance have a significant impact. In all four countries, the dollar amount involved is relatively small. In Senegal, a key ally for the U.S. in the region, U.S. assistance for agriculture amounts to 0.1% of all U.S. assistance. These resources are considered critical to addressing food insecurity for some of Senegal’s most vulnerable people and towards creating the conditions needed to secure peace in the Casamance region. A sudden withdrawal of U.S. agricultural support—the FY ’19 budget proposes a 56% cut—would do little to save U.S. funds. It would, however, potentially contribute to destabilizing an already long-running, low-level conflict in the poorest area of Senegal, while also severely affecting broader food security across the country and potentially affecting regional stability.

Four Case Studies

Nicaragua

The FY ‘19 budget proposes a 100% cut to Nicaraguan bilateral assistance. Implementing this budget would produce a gap in democracy support that no other donor will fill.  It will undermine the democracy movement, reduce the level of credible information available, and force a number of organizations to close.

The U.S. is the largest supporter of civil society in Nicaragua, helping to build the capacity of organizations involved in government accountability, legislative monitoring, women’s rights, and other human rights issues. More importantly, however, the U.S. is the only donor to operate independently of the Nicaraguan government’s influence. For this reason, it is more able than other donors to support issues which challenge government policy and hold them to account. As a major donor said: “The government really wants us to stop funding CSOs. They ask us to present to them the [program] plans so that they can approve or not whether we finance that CSO”. None of the seven other major donors interviewed said they were able to fill a gap left by the U.S…

Without U.S. support, a large number of civil society organizations, particularly advocacy groups and independent research institutes, said they would likely close or severely reduce scope. There would be a near-total reduction of support for local community groups, which foster citizen engagement to strengthen local accountability mechanisms and ensure that the rights of women, the LGBT community, and other marginalized communities are taken into account.

All stakeholder groups expressed considerable concern about the impact of a U.S. withdrawal on Nicaragua’s democracy. Many highlighted that this would strengthen the regime by ensuring that peaceful opposition is silenced and that independent services would no longer exist. The result would be deepening government control on everyday life.

Cambodia

The U.S. FY ‘19 budget proposes the elimination of funding for the agricultural sector. Implementing this budget would leave large gaps in poverty reduction efforts, immediately impacting some of the most vulnerable Cambodian people.  This would also increase the Cambodian government’s influence in the country – using concessional loans from the Chinese government.

The U.S. is one of the largest agricultural donors in Cambodia. Importantly, the U.S. is one of the only grant providers, making it a critical funder for non-governmental organizations that directly focus on poverty reduction. Other donors largely support the Cambodian government in its pursuit of larger-scale economic growth projects. The Cambodian government suggested there would be little direct impact to itself or its strategy from a U.S. withdrawal. However, an elimination of U.S. funds would immediately impact subsistence farmers, economically insecure women, and malnourished children.

Further, a loss of U.S. grants to Cambodian NGOs would mean few alternative funding routes, likely pushing them towards the, reportedly, Chinese government-funded and Cambodian government-backed, Civil Society Alliance Forum. Civil society worried that that such support would require recipients to politically align with the Cambodian People’s Party (CPP) or agree not to challenge the government, thereby helping the CPP to strengthen its rural powerbase at a time when its support is waning.

Liberia

The FY ‘19 budget request proposes cutting bilateral assistance to democracy and governance by 66%. Implementing this could slow or reverse existing U.S. achievements in strengthening state institutions and significantly reduce available support to legal services, media, and civil society to hold the government accountable. This will also make it harder to tackle the persistent issue of corruption.

The peaceful transfer of power between political parties following the 2017 election was a promising indicator of Liberia’s progress. However, the resulting high turnover in government officials has left many key posts filled by people who lack either governance experience or the needed technical skills.  Interviewees noted that this is a particularly crucial time for Liberia and precisely the wrong time to reduce assistance. With diminished support, the government’s capacity to manage the machinery of state, generate its own resources, and tackle corruption faces a significant risk of backsliding.

The U.S. has also been a key supporter of Liberia’s decentralization agenda, which some consider essential to ensure areas outside of the capital city develop, thus enabling people to access basic services and assist the central government in raising domestic revenue. Several interviewees highlighted that a sudden and significant reduction of U.S. work in this area would undermine this agenda.

Senegal

The FY ‘19 budget request proposes cutting bilateral agricultural assistance to Senegal by 56%. U.S. assistance targets the production of staple crops used for basic consumption rather than cash crops. A severe reduction of U.S. spending would leave a gap in this work and adversely affect food security.

More so than other donors, USAID’s agricultural work focuses on tackling hunger through increased food crop production. Through its Naatal Mbay program, USAID is increasing productivity by supporting over 100,000 farmers to improve output. This is done, for example, by training farmers to reorient their practices to take account of the climate by better leveraging modern technology and insurance. Parallel with this work, the Cultivating Nutrition program supports those most at risk of hunger to develop garden farms and allotments to meet their own food needs. Meanwhile, other donors are focusing on the production of cash-crops, which is important to the country’s economic growth. There is widespread concern that a significant reduction in U.S. assistance would upset the balance in the production of staple versus cash crops, having a profound impact on the population. An estimated 750,000 people will need food assistance outside of the growing season this year, an increase of 200,000 from last year. This figure puts Senegal near crisis point, which increases the risk of instability and migration.

This is particularly true for the Casamance region, where there has been a long-running, low-level conflict.  Agricultural assistance is considered vital to fostering the conditions necessary for peace, and there was concern among interviewees that a U.S. withdrawal could contribute to worsening the conflict. A former rebel combatant told us: “If [donors] invest in agriculture, in employment opportunities, then the Casamance will be stable – for sure. There is so much potential in Casamance – fish, mangoes, other foods – but they go spoiled. We need commercialization, transformation, and [food processing] factories. We need opportunities and jobs.”

There was also concern that a U.S. withdrawal would impact the wider donor community. Several donors highlighted the importance of USAID’s contribution in ways other than finance, such as leadership in identifying the challenges, solutions, and the production of important assessments, which they find to be a useful resource for their own programs. Government officials highlighted the active collaboration that they and USAID enjoy, noting that the U.S. tends to be among the most reliable and collaborative donors.

Conclusion

Relatively small amounts of money, strategically used to advance U.S. values and interests – addressing poverty, building democracy and protecting civil society space – have paid off.  Significant and sharp reductions will not help to balance the U.S. budget but will undermine our own investments and interests and produce the opposite result of what we intend. 

[1] For more information about the methodology and to access to the country case studies, see http://www.publishwhatyoufund.org/projects/us-foreign-assistance/