Donald Trump’s Friday inauguration ushers in a new era in American development policy — one currently shrouded in uncertainty.
U.S. aid agencies have yet to see a landing team from the administration, and Trump himself has given few clues as to his policy, though his nominees for key posts as secretary of state and the ambassador to the U.N. have hinted at what may come in their confirmation hearings.
Development stakeholders worry that massive spending cuts could eliminate entire departments, or potentially agencies. Devex and other media, including the Hill, have reported that the Overseas Private Investment Corp. for example will face a difficult funding and reauthorization process. But others point to the bipartisan support in Congress, which, despite being divided on most issues, passed a series of global development bills in the past year.
Against this backdrop Devex is looking ahead at what some of the big storylines are as Trump takes the reins — and what the global development community should be watching as the next four years unfold.
1. Climate change and energy.
Trump has repeatedly questioned climate change, and said the U.S. may pull out of the Paris climate agreement. That has given rise to concerns about what the future might look like for climate change policy and how that might impact people in developing countries, who are likely to bear the consequences of global warming more heavily.
While it’s not assured, it seems likely that climate-related programs may be cut and that funding will be redirected. While the State Department sent a second $500 million installment to the Green Climate Fund, a financial mechanism of the Paris agreement designed to support climate adaptation in developing countries, it seems possible, if not likely, that the U.S. will not give the additional $2 billion it had promised.
While funding for climate change and programs related to climate adaptation may drop off, support for energy, both from the U.S. government as well as the private sector, seems likely to continue. Congress has also shown its willingness to support energy projects, including Obama’s Power Africa Initiative, when it passed the Electrify Africa Act last year. But it’s possible that future funding won’t follow the same guidelines around the type of power generation as have been in place during the Obama administration. However, investors and companies, including many from the U.S., are seeing the opportunity to develop renewable energy, particularly in Africa and are unlikely to back off of an investment opportunity because of the change in government.
Momentum toward climate adaptation in the private sector is well underway, and less leadership from the U.S. governments is unlikely to stop action. The level of support demonstrated by the private sector in the lead up to the climate agreement in Paris was an indication that many businesses now see climate change as a threat to long-term growth and the future prosperity of their businesses. As a result many see no choice but to act, Lord Mark Malloch-Brown, who chairs the business and sustainable development commission, recently told Devex.
2. The national security-development nexus.
How the development community is tied into broader discussions of national security will be important in the coming years, particularly in an administration that has said it will focus on “America first.”
Development programs — from global health to governance and economic development to education — can be tied directly to increasing global stability, which in turn improves U.S. national security. While the development community has sometimes used the argument, particularly during efforts to secure funding in Congress, tying development to national security unnerves many nongovernmental organizations, who don’t want to be seen as a tool of the Pentagon.
But at a time of funding cuts, how the development sector sells its work in Congress and to the American public may be an important part of determining how it will be perceived and how it will continue. Trump has indicated that tackling terrorism is important, so programs countering violent extremism may fair better. The stability and security argument may also go over well with the business leaders who make up Trump’s cabinet when it comes to funding programs that boost economic development.
“I think the most important thing is the understanding that investments abroad are very good for economy and our job creation while at the same time being good for global stability and our own national security,” Elizabeth Littlefield, who steps down Friday as the CEO of the Overseas Private Investment Corp., told Devex. “There's few things that are more powerful for building stable and resilient societies than private investment creating jobs and growth in those economies. That’s something the trump administration will clearly understand, just as the military understands it.”
And the incoming military leadership does seem to understand it. Secretary of Defense Gen. James Mattis, who was recommended by the Senate Armed Services panel this week and is on his way to being confirmed, has spoken about the importance of development in national security in the past. The most notable occasion is likely his statement in March 2013 in front of the same committee when he said: “If you don’t fund the State Department fully, then I need to buy more ammunition.”
More recently Mattis has traveled the country to “make the case that the military alone cannot keep our nation safe, calling the State Department and USAID ‘essential’ to promoting America’s interests abroad along with ‘preventing conflict and countering extremism,” according to a press release from the U.S. Global Leadership Coalition, where he serves on the national security advisory council.
3. Women and girls.
In the past Donald Trump has made disparaging remarks about women, so there are some in the development community who may watch with trepidation to see what his policies will be around supporting women and girls.
Globally, efforts targeted at improving the health and livelihoods of women and girls have grown in recent years, amid discussion about the multiplier effect that investing in them can produce. Many of those efforts are likely to continue, but what U.S. government programs tackle remain to be seen.
Dina Powell, a partner at Goldman Sachs, who headed the company’s 10,000 women initiative that trains women entrepreneurs in business and management and provides them with access to capital, will be joining the administration in a senior role. Politico reported that she will focus on entrepreneurship, economic growth and the empowerment of women.
Secretary of State nominee Rex Tillerson said he would continue to work for women’s economic empowerment through USAID and other agencies during his confirmation hearing. When he led ExxonMobil, one of the company’s primary areas of philanthropic investment was women’s economic opportunity.
Where concerns lay for many in the global health sector is in the potential reinstatement of the the "Global Gag Rule," otherwise known as the Mexico City Policy, which requires that any overseas organization receiving U.S. aid not have anything to do with abortion. Regardless, many stakeholders have voiced concern that funding targeting women and girls’ health will be conflated with financing abortion and will be cut. Tillerson sidestepped a question about the issue in his hearing.
The U.S. President’s Emergency Program for AIDS Relief, for example, has identified that adolescent girls and young women still account for 71 percent of new transmissions among adolescents in sub-Saharan Africa. Specific programs targeting that population are necessary to curb the spread of the disease and additional U.S. policy restrictions, such as requiring abstinence-only education programs or a an anti-prostitution oath could serve as barriers, according to a recent report.
4. US role in multinational institutions.
The U.S. has long held considerable power and authority at multilateral institutions like the United Nations and the World Bank, but as Trump ushers in a new era of more inward-looking American politics, the country’s role in those institutions and the work they do is dubious.
Trump has been critical of the U.N. and of international institutions, including in a tweet last month when he said the U.N. “is just a club for people to get together, talk and have a good time.”
Even before he takes office, there are threats to U.N. funding. On Jan. 12 Sens. Lindsey Graham and Ted Cruz introduced a bill in the senate that threatens to cut U.N. funding if the security council doesn’t reverse its resolution condemning Israeli settlements. Trump himself promised that things would be different at the U.N. once he took office in a tweet following the adoption of the resolution.
But in her confirmation hearing this week Nikki Haley, Trump’s pick for ambassador to the U.N., said repeatedly that she does not support a “slash and burn” approach to defunding the U.N.
“What is important is we look at every organization and see if it is working for us, see if it is something we want to be a part of and I will report back to the president-elect. I know that he had made comments about the U.N., but those are not my feelings,” she said in the hearing.
Among the U.N. bodies she singled out for closer examination are the U.N. Security Council, the U.N.’s peacekeeping operations, the General Assembly and the Human Rights Council.
It seems likely the U.S. could cut funding, especially to certain U.N.-related mechanisms like the Green Climate Fund, and that it could call for reforms. The Heritage Foundation, which is playing a considerable role in the transition and is involved in filling key administration positions, has recommended several changes at the U.N. — from the size of the security council, to tieing U.S. aid to political support at the U.N. and increasing U.S. oversight over U.N. agencies and spending.
5. Africa’s growth.
Africa’s growth is expected to pick up in 2017, and the continent represents both some of the most increasingly attractive emerging markets and some of the most challenging countries in which to improve development.
Growth in sub-Saharan Africa is expected to increase to 2.9 percent in 2017, according to the World Bank, but those projected gains could be affected by changes in U.S. policy. While mobile telecommunications and the rapid spread of internet connectivity present opportunity, there is still uncertainty about how U.S. policy will affect both aid and economic growth on the continent.
“Because of the outsize role the United States plays in the world economy, changes in policy direction may have global ripple effects, World Bank development economics prospects director Ayhan Kose, told Devex recently. “More expansionary U.S. fiscal policies could lead to stronger growth in the United States and abroad over the near-term, but changes to trade or other policies could offset those gains.”
Some are concerned about what might happen to trade relationships as a result of Trump’s vocal criticism of trade deals, though the African Growth and Opportunity Act, which has created about 300,000 jobs on the continent, was renewed through 2025* with bipartisan support.
The recent revelation in a New York Times article of a four-page questionnaire about Africa-related policies has raised further concerns in the development community about whether investments on the continent may be at risk.
The questions included queries about how U.S. businesses compete in Africa and specifically whether the U.S. was losing deals to the Chinese, and questions about corruption in Africa and how much funding is stolen.
The tone of some of the questions was what gave some development professionals pause, for example in follow up to the corruption question, the questionnaire asks “Why should we spend these funds on Africa when we are suffering here in the U.S?”
It also asks pointed questions about PEPFAR and whether it is a worthy investment given African security concerns or if it becoming “a massive, international entitlement program?”
That seems to indicate a different position than Tillerson articulated in his hearing when he called PEPFAR “one of the most extraordinarily successful programs in Africa.”
It’s not the only time that Trump’s nominees disagreed with some of the positions he’s stated or other indications him or those involved with the transition have made. So as the cabinet takes up its posts and policymaking begins in earnest, who calls the shots will also determine the direction of development policy.
Updated Jan. 23, 2017: This article was updated to clarify that AGOA is in effect through 2025.
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