U.S. President Donald Trump with Vice President Mike Pence and House Speaker Paul Ryan. Photo by: The White House

WASHINGTON — For the U.S. development community, 2017 was different.

Drastic budget proposals, hiring freezes, and murky reorganization plans sent development advocates scrambling. They watched a skeptical White House call for deep cuts — and the U.S. Congress emerge as foreign aid’s new center of gravity. Advocates responded to calls for reform with specific ideas about what it might include. They welcomed a new U.S. Agency for International Development administrator, while they denounced restrictive new policies and questioned the wisdom of scaling back proven programs.

How Trump's first year impacted developing countries

Devex spoke with a number of government officials, NGO leaders, and USAID contractors about how the budget recommendations and policies coming through Washington are impacting people in developing countries. The picture they paint is one filled with apprehension, disruption, and the potential to reverse or limit gains and effectiveness.

On Wednesday President Donald Trump added one more dramatic scene to an already drama-filled year, threatening to end U.S. foreign assistance to countries that vote to condemn his decision to recognize Jerusalem as the capital of Israel.

“There is a level of intensity this past year that has been noticeably different,” said David Ray, vice president for global advocacy at CARE USA.

When Trump unveiled his National Security Strategy on Monday, development advocates rushed once again to scour the document for any new signals about how foreign assistance fits into this administration’s foreign policy architecture. Nearly one year into the Trump administration, that question remains clouded by mixed messages, according to development leaders who spoke to Devex. In a year infused with uncertainty about the future of U.S. efforts to combat global poverty, improve health, and invest in developing countries, it has been difficult to separate the threat — and potential promise — of change from change itself, they say.

“The actual reality is not dramatically different than where we were a year ago … The significance of the threat to the U.S. role in fighting global poverty and social injustice has been so real this year that I think it has mobilized us to come together in a way that’s different than I’ve seen in recent years,” Ray said.

While some of the most dramatic proposed changes to U.S. development efforts have not — yet — come to pass, development leaders caution that does not mean the political battles are over. The political landscape for U.S. foreign aid shifted this year, and significant tensions between budget, policy, and personnel have yet to be resolved. It is not unusual for a new administration to take its time formulating ideas about how and why to use foreign assistance tools, but the Trump administration has done so against a backdrop of proposed budget cuts that would fundamentally narrow the scope of U.S. engagement in the developing world.

In some cases, the mere threat of deep cuts has carried real consequences for the U.S. government’s development partners. In other cases, advocates still see opportunity to channel the disruption sown by a new — and unconventional — administration into positive steps toward reform.

“We’ve gone from the chief spokesperson and champion residing at 1600 Pennsylvania Avenue to now shifting all the way to the other end of Pennsylvania Avenue with the Congress. That’s a radical shift. Never in the time that I’ve been working on this has the president’s request been the low bar. It’s always been the high bar.”

— Tom Hart, North American executive director of the ONE Campaign.

A tug of war — with development in the middle

For years, global development has been a rare point of bipartisan collaboration. Republican President George W. Bush created some of the largest U.S. development initiatives, which Democratic President Barack Obama expanded and reauthorized. With the exception of some noteworthy ideological fights around issues such as abortion and climate change, previous administrations pursued their development goals in relative cooperation with congressional lawmakers from both political parties.

2017 saw new divisions over development emerge — not between Democrats and Republicans, but between President Trump’s budget planners and the U.S. Congress.

“The last year would be best characterized as a full-blown tug of war between [the White House Office of Management and Budget] and the Congress, with the development community in the middle,” said Robert Mosbacher, who led the Overseas Private Investment Corp. under President George W. Bush.

That tug of war started with OMB’s “draconian and counterproductive” recommendation to cut roughly one-third of the foreign assistance budget, Mosbacher said, and continued with Congress’s reassurance that cuts of that size were not going to happen.

For some lawmakers alarmed by the president’s budget request, the cuts serve as evidence that an agenda to dismantle U.S. government programs persists inside the White House. Democratic Rep. Barbara Lee from California told Devex that proposals to slash foreign assistance spending reflect the continuing influence of Steve Bannon, Trump’s former chief strategist who resigned earlier this year.

“Their policy is the policy agenda of deconstructing the administrative state,” Lee said. “You will not have a United States government as we know it if Donald Trump has his way.” Even within the administration there are different camps, which seem to be engaged in their own battle for influence inside the White House.

In May the president proposed a 17 percent cut to the President’s Emergency Plan for AIDS Relief. In September he highlighted PEPFAR’s investments in “better health and opportunity all over the world” in his speech to the United Nations General Assembly. On multiple occasions Trump derided America’s past efforts at nation building. In May he nominated a USAID administrator — Mark Green — who has made democracy and governance support a pillar of his career in development leadership.

Tessie San Martin, the president and CEO of Plan International USA, is a member of the Modernizing Foreign Assistance Network, a group that advocates for more effective foreign assistance. In that role, she has met with members of the Trump administration within USAID, the State Department, and OMB.

“Those have been good conversations with very thoughtful people that are really taking this in and trying to understand and really trying to figure out how do we take all of this and really develop a better and more effective approach to our foreign assistance,” San Martin said.

Yet despite those good conversations, the administration has not reversed its push for budget cuts that the development community considers damaging. The administration’s fiscal year 2019 budget request is expected to include even deeper cuts than those that have been floated so far.

“I think the budget — tragically, interestingly — is disconnected from the policymaking and prioritization of much of the administration,” said Tom Hart, North American executive director of the ONE Campaign.

“Congress wants consultation, but what they get is a briefing.”

— Connie Veillette, a senior fellow at the Lugar Center.

While continuing to try to amplify the voices of those inside the White House who believe foreign assistance is an important part of U.S. foreign policy, the development community has turned its attention to Congress to shore up support for their programs and priorities.

“We’ve gone from the chief spokesperson and champion residing at 1600 Pennsylvania Avenue to now shifting all the way to the other end of Pennsylvania Avenue with the Congress. That’s a radical shift. Never in the time that I’ve been working on this has the president’s request been the low bar. It’s always been the high bar,” Hart said.

With lawmakers expressing their own frustrations about being kept in the dark when it comes to the administration’s reform and reorganization plans, the development community has had success this year in forging a partnership with key congressional players. Some aspects of what the Trump administration proposes for its foreign policy redesign are likely to require congressional approval, and budget decisions are firmly under Congress’s control. That makes Capitol Hill a battleground for influence over what the future of U.S. foreign assistance will look like.

“If it’s a battle, the aid community is winning,” said Connie Veillette, a senior fellow at the Lugar Center. “What [members of congress] keep telling us over and over again is that they have not been kept in the loop … Congress wants consultation, but what they get is a briefing.” 

Republican-controlled appropriations committees in the House and Senate have flatly rejected the Trump administration’s proposed cuts. They have gone a step further in some cases, securing additional funding to address emerging global crises without a request from the Trump administration to do so. When lawmakers recognized that U.S. funding was inadequate to respond to four simultaneous potential famines, they managed to secure nearly $1 billion in relief assistance.

Rep. Lee helped lead that effort. “That was something that I think is a good example [of what can happen] when we can work together without the administration pushing back,” she said.

Ultimately, development leaders believe, it will fall to a coalition of congressional leaders and aid supporters inside the White House to determine whether reform is driven by a desire to achieve better results around the world, or by a desire simply to spend less money.

A disconnect between budget and policy

“It’s really stimulated a very healthy and, I think, creative debate about how do we deliver both development assistance, as well as how do we strengthen the economic diplomacy tools that we have at our disposal.”

— Robert Mosbacher, former head of the Overseas Private Investment Corp

The development community has worked hard to show it is open to the idea of reforming U.S. development programs for greater efficiency and effectiveness — as long as the goal is to make them better, not weaker.

“It’s really stimulated a very healthy and, I think, creative debate about how do we deliver both development assistance, as well as how do we strengthen the economic diplomacy tools that we have at our disposal,” Mosbacher said. Half a dozen different think tanks and advocacy groups put forward policy proposals this year — and when they recognized the complementarity of their work, combined those reform proposals into a package of mutually agreed reform principles the White House and Congress could consider.

At times, the Trump administration — or, at least, facets of it — has seemed open to a good faith effort to pursue long-sought changes to America’s development instruments. USAID Administrator Mark Green has described his interest in being more innovative in terms of how the agency spends its money, to expand the range of actors and organizations USAID is able to work with, and to bring more science and technology to bear on persistent development challenges.

Green has also spoken about the need for a thoughtful approach to transitioning countries off of U.S. assistance — to orient foreign aid around the goal of ending its need to exist. That conversation could represent a middle ground between the Trump administration’s desire to cut superfluous programs and a development effectiveness agenda that calls for more country ownership and an evidence-based approach to transitioning countries from assistance to partnership.

“That’s what Mark is doing. I think he’s doing a great job. He’s asking for advice and input from outside, and I think that the process that he sets up and the benchmarks are going to be reasonable,” Veillette said. “Whether USAID is going to have free reign in determining which countries we transition is another story,” she added.

Plans underway for new US development finance bank

The United States may soon have a new development finance corporation. Efforts are underway in Congress and in the Trump administration to create a new development finance institution with greater capabilities and the ability to grow. Here's what you need to know.

One of the most remarkable policy turnarounds thus far in the Trump administration has been on the issue of development finance. Early administration budgets called for funding to the U.S. development finance institution, the Overseas Private Investment Corp., to be slashed, and called on the agency to “initiate orderly wind-down activities.”

Over the course of the next several months, in part because of the influence of Ray Washburne, OPIC’s new CEO, the administration changed its stance. In a speech in Vietnam in November, Trump said that the U.S. is committed to reforming its development finance institutions and efforts are underway both within the administration — at the White House and National Security Council — and in Congress to create a new U.S. development finance corporation that would expand OPIC’s current authorities, potentially absorb other agencies, such as the U.S. Trade and Development Agency, and grow U.S. development finance capabilities.

A bill that would create the new institution is expected to be introduced by February, according to those working on it.

Washburne told Devex in September that the administration was “very, very supportive of OPIC,” and that he was there to grow the agency and not shut it down. “The original budget had a lot of things zeroed out, now people are in there, everyone gets more educated on what it is,” he told Devex at the time. “That’s been a pivot.”

A lost opportunity

In other areas, the looming specter of budget cuts has driven policy decisions in ways development leaders find troubling.

PEPFAR, despite Congress’s unambiguous rejection of the $800 million cuts proposed by the president, adopted a new policy this year that some observers feel was written in anticipation of less funding. The new policy proposes focusing PEPFAR’s activities in fewer countries that are close to epidemic control. Some HIV/AIDS advocates have charged that it represents a step backwards in the fight against a pandemic that threatens to spread without aggressive efforts to stay ahead of it.

“It’s unclear what the policy will be once they get the funding,” Hart said. “The policy has been written to a rather severe cut. It inserts confusion and uncertainty into the system, which of course, with a deadly disease in faraway places, is really tough.”

“How are you going to spur innovation and risk taking in an environment of draconian cost cutting? Who the heck is going to put their neck on the line … if, at the end of the day their job is on the line, their funding is on the line.”

— Tessie San Martin, the president and CEO of Plan International USA

Many observers see a similar dynamic at work in the administration’s slow pace in staffing the country’s foreign policy institutions. Even though Congress has maintained funding for these agencies, the Trump administration has implemented a prolonged hiring freeze, halting qualified candidates from entering positions in USAID’s foreign service, for example.

Rhetoric around slashing aid budgets also runs counter to some of the goals the White House has set for itself in rethinking how development tools can work better, according to advocates. For an administration that has championed more innovative ways of working, the threat of impending cuts is more likely to make development professionals act conservatively rather than take the kinds of risks that can foster new ways of doing business, said San Martin.

“How are you going to spur innovation and risk taking in an environment of draconian cost cutting? Who the heck is going to put their neck on the line … if, at the end of the day their job is on the line, their funding is on the line,” San Martin said.

“These two tensions, these two forces have to somehow be resolved … If we’re in this constant dialogue about 30 to 40 percent cuts for the next four years, I think it’s going to be hard to advance an agenda of innovation and effectiveness and risk taking,” San Martin said.

Others see a lost opportunity in the administration’s cut first, ask questions later approach to reform. The development community has had to play defense at a time when it could be playing offense and moving important priorities forward.

“When moving that agenda forward comes only through a struggle between the Congress and the administration, that just limits the amount of progress that can be made. What’s lost is the potential for accelerated rate of change in the world. That’s the disappointing part of this dilemma,” Ray said.

What's the future of U.S. aid and development policy under the Trump administration? Read more Devex news and analysis.

About the author

  • Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.