November 17, 2017

Shifting Gears – How Countries Transition From Aid Recipient to U.S. Partner?

By Sean Hansen

At the heart of USAID Administrator Mark Green’s vision for the agency is “to end the need for its existence,” and a desire to transition countries that may no longer need development assistance to a new relationship with the United States. But against the backdrop of the proposed 32% cut to the International Affairs Budget, there have been some concerns that “transitions” could serve as a cover for cutting aid budgets and closing missions.

Fortunately, Administrator Green has said that aid transitions should be driven by the capacity of countries to take responsibility for their own development, and has noted that we “would not walk away from our work or our prior investments.” He recently told Congress that he is directing his team to develop metrics which would guide USAID towards responsibly transitioning its relationships with increasingly prosperous countries.

Green’s vision has reignited an essential development debate: how and when should the United States responsibly transition foreign assistance — and how can we ensure that U.S. investments are protected after the United States leaves? Indeed, developing successful transition strategies is an area where the USGLC’s Report on Reports found broad consensus; but what might this look like?

From Recipient to Aid Donor: South Korea

Since the Marshall Plan succeeded in rebuilding Europe’s infrastructure and economy, U.S. foreign assistance has sought to emulate its success to help countries take responsibility for their own development and well-being so that they, too, might ultimately become aid donors. One such model is South Korea, which has evolved from a recipient of U.S. assistance to an aid donor.

Once a war-torn nation with a struggling economy, South Korea is now a strategic ally and is America’s sixth largest trading partner today. Since USAID closed its mission in Seoul in 1980, total annual trade with the nation has skyrocketed to over $43 billion — exceeding the total amount of assistance the U.S. gave to South Korea since the Korean War. Now a donor, Seoul provides more than half a billion dollars’ worth of aid each year, operating in 54 nations around the globe.

In addition to South Korea, many other nations have seen successful aid transitions, including Chile, Poland, Uruguay, Panama, and Costa Rica — with many having their own aid programs today.

Transitioning to Strategic Partnerships: Brazil

As the landscape of global poverty continues to shift, today more than half of the world’s extreme poor are concentrated in middle income nations like India, Nigeria and China. Recognizing this challenge, USAID has begun to shift some countries to “strategic partnerships.”

In 2014, USAID made Brazil its first “Strategic Partnership Mission” rather than closing its mission. This transition was a recognition of Brazil’s impressive economic growth and great strides in alleviating poverty — lifting over 50 million people out of poverty through the Bolsa Familia program — despite its continued challenges of rural poverty, income inequality, and corruption.

This new partnership reflects Brazil’s position as an aid donor today and a key USAID partner in tackling regional development challenges. As strategic partners, Brazil and the U.S. work to foster “trilateral cooperation” by leveraging their unique expertise in development — working in Mozambique, Honduras, and Haiti to reduce poverty, hunger, and food insecurity.

Leaving Behind a Legacy: Eastern Europe

In hopes of protecting U.S. investments after mission closures, another successful strategy has been to create leave-behind institutions that ensure the continuation of resources and American presence, allowing nations to smoothly transition from aid recipient to economic and strategic partner.

After USAID’s successful mission closures in Romania in 2007 and Bulgaria in 2008, then-USAID Administrator Henrietta Fore helped establish the German Marshall Fund’s Black Sea Trust. The institution was designed to carry forward the United States’ new partnership with Romania, and ensure continued resources for Romania’s democratization and development after USAID formally closed its presence. Fore noted at the time that “This marks the beginning of a 10-year partnership between the U.S., Romania…and other donors to strengthen cross-border ties, civic participation, democratic governance, and rule of law in the Black Sea region.”

USAID has established legacy institutions elsewhere, including the Costa Rica-USA Foundation (CRUSA), founded before USAID closed its Costa Rica mission in 1995, and which continues to support the strong partnership and progress in Costa Rica.

Risks of Closing Missions: South Sudan

History has shown us that the most successful aid transitions are driven by long-term transition strategies, negotiated with partner countries, and dictated by development progress – not political aims or budget cuts. But this has not always been the case. Severe cuts to USAID’s budget in the 1990’s forced the agency to close over 26 missions abroad and lay off thousands of development experts. While some of these missions were adequately prepared for transitions, others were rushed towards closure and ended up costing taxpayers more in the long term. Of those missions closed in the 1990s, many needed to be reopened years later at great costs — including Tunisia, Pakistan, Myanmar, Afghanistan, Ecuador, and Sudan.

In South Sudan, for instance, the U.S. played a key role in brokering the nation’s 2005 peace agreement and subsequently USAID greatly reduced its peacebuilding assistance. But just a few years later, South Sudan fell back into armed conflict. While the renewed conflict was driven by its political leadership, USAID was compelled to respond with significant emergency assistance. Since conflict erupted in 2013, the U.S. has provided nearly $2.7 billion in aid to South Sudan — with as many as 7.6 million South Sudanese still in need of humanitarian assistance.

Engaging Congress:

Although Administrator Green has made the case for smart, strategic transitions driven by development goals — questions remain about the pressures to close USAID missions. The good news is that Congress has already pushed back against the Administration’s requested cuts to the International Affairs Budget. In addition to restoring much of USAID’s funding in its appropriations bill, Senator Lindsey Graham’s Appropriations Subcommittee has also mandated that all development assistance strategies must include a transition plan that identifies end goals for the development mission, including options for winding down the program.

With many examples of current recipients of U.S. foreign assistance that may be ready for transition strategies, the Administration should draw on lessons learned to do so responsibly — and cost effectively.

image photo credit: Ellie Van Houtte/USAID