US budget slashes global development funding, stresses burden sharing

The U.S. Government Publishing Office and the Office of Management and Budget release copies of the first phase of the president's FY2020 budget proposal. Photo by: REUTERS / Erin Scott

WASHINGTON — For the third consecutive year, the Trump administration’s budget proposes slashing global development funding. It also underscores the need for increased burden sharing and proposes policy changes related to U.S. aid reorganization. 

The budget requests $42.7 billion for the foreign affairs budget, including the Department of State and U.S. Agency for International Development. Congress appropriated $56.1 billion in the fiscal year 2019.

“For two years we have seen the administration call for an increase in burden sharing from other donors, but we have yet to see a coherent strategy of how a lower budget request results in increased burden sharing.”

— Megan Doherty, senior director of policy and advocacy, Mercy Corps

It is widely expected that Congress will reject the administration’s proposal when determining its budget — and there were already some signals Monday that might be the case. Ranking member of the House Foreign Affairs Committee Michael McCaul, a Republican from Texas, said Monday in a statement that while he welcomes cutting “waste, fraud and abuse” from programs, “we must be careful that cuts don’t have unintended consequences that cost us more in the medium and long term. This is especially true of impactful cuts to humanitarian and development assistance.”

Despite the expected pushback from Congress, the budget fight may be more challenging this year, in part because there is no budget deal and appropriators will have to negotiate whether to raise spending caps.

In addition to the proposed cuts, the budget repeatedly mentions the need for other countries to share the burden for funding various global health and development priorities and pointed to aid being seen as a foreign policy tool: “The budget supports America’s reliable allies, but reflects a new approach toward countries that have taken unfair advantage of the United States’ generosity,” the 150-page budget document reads.

Here’s what is buried in the budget:

Burden sharing

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The budget repeatedly mentions the need for other countries to step up their commitments and share the burden of addressing global health and development concerns. The U.S. will “compete and lead” in multilateral organizations to protect American principles and will focus its efforts on organizations that serve American interests, the document reads.

The rhetoric around burden sharing and the reference to aid as a political tool was concerning to some organizations, including Mercy Corps, according to Megan Doherty, senior director of policy and advocacy at Mercy Corps.

“For two years we have seen the administration call for an increase in burden sharing from other donors, but we have yet to see a coherent strategy of how a lower budget request results in increased burden sharing,” she said.

The issue of burden sharing is perhaps most prominent in the budget’s proposals for multilateral institutions. It includes $206.5 million in funding for the World Bank’s International Bank for Reconstruction and Development, part of the capital increase, but says that the U.S. “demands financial discipline, high performance and accountability, fair burden sharing, and strategic investments that serve U.S. development, foreign policy, and national security goals.”

The total contributions to international organizations in the budget was down from the previous administration’s request — and more than $400 million less than the fiscal year 2019 estimate. Contributions to peacekeeping activities were also more than $200 million below what Congress has appropriated.

The State Department budget justification, a document explaining details of the budget, lays out an expectation that all international organizations reduce costs, improve accountability, and share the funding burden more equitably. It also says the U.S. will make reductions to organizations and programs “whose results are unclear or whose work does not directly affect our national security interests.”

The budget specifically discusses competition with China and Russia, and how the new Development Finance Corporation can be used to support U.S. national security and economic strategy and allies in places such as the Indo-Pacific.

In remarks about the budget on Monday, USAID Administrator Mark Green said that China and Russia’s approach seeks to “weaken confidence in democratic and free market systems, saddle countries with unsustainable debt, lead to the forfeiture of strategic resources, and further the militaristic ambitions of those authoritarian actors.”

To that end, he announced that USAID will unveil a new framework in the next few weeks to counter Russian influence in Europe, Eurasia, and Central Asia.

Global health

With the Global Fund to Fight AIDS, Tuberculosis and Malaria in a replenishment year, many global health leaders were looking to the budget to see what sort of signal the administration would send on its commitment to the organization. It fell short of what many global health advocates hoped.

The budget by the numbers:

► $300M for the new Development Finance Corporation, an increase in funding, both to help stand up its equity investment capability and to support additional administrative expenses as it launches later this year.

► $800M for the Millenium Challenge Corporation, the same as the fiscal year 2019 request and about $100M less than Congress has appropriated in recent years.

► $50M for a new presidential initiative, Prosper Africa, to increase two-way trade and investment between the U.S. and African partners, advancing mutual prosperity and building on the State Department and USAID’s focus on private sector engagement.

► $70M for Power Africa to facilitate private investment in power generation and create new opportunities for economic partnerships.

► $20M for a New Partnerships Initiative that will increase impact and country progress through adaptive partnering for foreign assistance.

► $100M in support of the Women’s Global Development and Prosperity Initiative.

The administration committed up to $1.1 billion a year for three years, which is below previous contributions and well short of the $1.56 billion a year the Global Fund was seeking to meet its $14 billion replenishment target. It also outlined a policy change: The U.S. has historically contributed one-third of the Global Fund’s budget, but the latest budget proposes reducing the U.S. contribution to a maximum of 25 percent of the organization’s budget.

The administration writes in the budget that its contribution will “support a global target of $13.2 billion,” however the Global Fund has said it needs to raise at least $14 billion for its replenishment this year. It is unclear where the $13.2 billion number comes from.

The State Department’s budget justification states that the $1.1 billion a year pledge will “reinforce U.S. leadership while encouraging greater burden sharing from other donors,” but global health advocates dispute that assumption.

“That policy proposal is really disturbing, and in that way, the proposed budget is more than just a funding cut. If enacted, it would signal a real retreat in U.S. global health leadership,” said Chris Collins, president of Friends of the Global Fight, an organization that advocates for U.S. investment in the Global Fund. “People should not take this budget as representing the U.S. pledge to the Global Fund; we have seen Congress reject the proposals the last two years, I think this year is no different.”

Collins and other advocates will now work to educate other countries about how the U.S. budget process works and that it is, in fact, Congress that will decide how much is allocated to the Global Fund. At the same time, they will be advocating against the proposed cuts to the President’s Emergency Plan for AIDS Relief.

Despite Trump’s assurance during the State of the Union address that the U.S. is committed to end AIDS in the U.S. “and beyond,” the administration has proposed a PEPFAR budget of $3.4 billion, a 22 percent cut from the $3.85 billion Congress appropriated last year. While the “and beyond” addition was an ad-lib, advocates are still disappointed to see such a cut to PEPFAR.

“It’s a stark juxtaposition with the rhetoric from the White House,” said Keifer Buckingham, a policy adviser at Open Society Foundations, adding that this type of cut would take PEPFAR back to funding levels not seen since the early 2000s.

Buckingham said she saw the shift to funding 25 percent of the Global Fund as a show of the administration’s broader rhetoric around other countries doing their part. But other countries are already stepping up their commitments, she added.  

Some global health programs, such as family planning and reproductive health, saw reductions, while others, including neglected tropical diseases, nutrition, and maternal and child health, remain the same as the fiscal year 2019 proposals. Global health security, with $90 million, saw a budget increase from the last fiscal year, as did TB, which had a budget request of $178.4 million last year and $261 million this year, according to the State Department justification.

Reforms

The budget seeks not only to reduce global development funding, but it also advances reforms and highlights programs it sees as representing its vision for foreign aid.

USAID looks for congressional support for reorganization plans

U.S. Agency for International Development leaders will testify on Capitol Hill this week — as lawmakers consider whether to grant approval to a series of reorganization proposals.

A merger between USAID’s Office of U.S. Foreign Disaster Assistance and the Office of Food for Peace has long been in the works, but the budget proposes taking the consolidation a step further by bringing the State Department’s humanitarian assistance work into the new USAID bureau.

All humanitarian assistance would then be funded through a single appropriations account. It would also restructure some of the State Department’s refugee and migrant work and create a leadership position that would be dual-hatted at USAID and State.

Merging the principal humanitarian accounts is technically a very good idea, said Jeremy Konyndyk, a senior policy fellow at the Center for Global Development, who served as the director of OFDA from 2013-2017: “Having a refugee account and a food account and an everything else account does not really reflect how the world works,” he said, adding that it makes it difficult to have coherent humanitarian assistance.

Having a single account will mean that aid is less siloed, both in terms of the type of aid, but also by who is receiving it, and decisions can be made by professionals closest to the crisis rather than by Congressional appropriations, Konyndyk said.

The policy proposal, however, is only “half good,” he said. The decision to move all assistance from State to USAID is one that Konyndyk warned against in a 2017 blog post. It is useful to have refugee expertise and assistance at the State Department with resources tied to it, he said.

“You need a strong partnership between State and USAID. Displacement is an inherently diplomatic and political issue, so State needs both the expertise and the resources at its disposal to be able to respond and influence policy and we’re concerned that the proposal ignores that reality,” said Mercy Corps’ Doherty.

Congress will likely carefully examine the administration’s proposals for reforms, particularly when it comes to humanitarian assistance and refugee and migrant issues, Konyndyk said. The administration will have to work hard to make the case for the changes and convince legislators that it would not further undermine U.S. leadership on refugee and migrant issues, which will be a “tough case to make,” he said.

It will be made more difficult by the fact that the administration still lacks senior people in key positions who would be making that case, Konyndyk said.

The budget also reiterates a commitment to further reform USAID and focus on “self-reliance” by prioritizing private sector-led growth, domestic resource mobilization, and economic and governance reforms. It highlighted the Women’s Global Development and Prosperity Initiative as the type of “responsible spending” the administration wants to achieve and touted its “cohesive whole-of-government approach,” rigorous metrics and leveraging of partnerships.

Another change proposed in the budget is that the U.S. African Development Foundation and the Inter-American Foundation would cease to be independent organizations and will become part of a new small grants office at USAID. The key to such a move would be ensuring that the unique capabilities of the agencies — they provide direct support to organizations and local civil society in the developing world — would not be lost in the process and the U.S. doesn’t have a good track record of doing that, Konyndyk said.

About the author

  • Saldiner adva

    Adva Saldinger

    Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.