US foreign aid could lose in the fight for more OCO funding

Republican Sen. Lindsey Graham from South Carolina. Photo by: Glenn Fawcett / U.S. Department of Defense / CC BY

The Republican-dominated Congress is divided between defense hawks who hope to raise budget caps to increase defense spending, and fiscal conservatives who want to keep caps at 2010 sequestration levels to eliminate the deficit by 2025.

The Overseas Contingency Operations account is a shortcut between the two factions. This “emergency fund,” originally set up for counterterrorism efforts, doesn’t technically count as discretionary funding, and so increasing defense’s budget through OCO could satisfy the defense hawks while keeping the fiscal conservatives at bay.

In recent years, OCO has been a source of emergency aid for the refugee crisis in Syria, the rebuilding of Afghanistan and the transition of operations from the U.S. Department of Defense to the U.S. Department of State in post-conflict states. Now in the spotlight as a source of defense money, OCO stands to contribute even less to aid.

An attitude adjustment

While the suggestion of drawing on OCO for defense drew ire from the Senate when the House proposed it in a budget resolution Wednesday, those initial critics are beginning to come around.

Republican Sen. Lindsey Graham from South Carolina, a strong advocate of increasing defense, was set to introduce an OCO amendment Thursday night, while House Speaker John Boehner told reporters Thursday afternoon that the House will vote in coming days on whether to further increase defense spending through OCO — a move many Republicans saw as “cooking the books” when the House proposed it Wednesday.

“Even though they don’t like the approach, they’ve just realized there’s not very many other good options,” Kate Eltrich, a partner at Sixkiller Consulting, told Devex.

While this could mean a more harmonious Republican party and a smoother track for tax reform later this year, aid professionals are watching closely as OCO — used in recent years to supplement foreign aid efforts — shifts hands.

Holding out for more

Those in Congress aren’t the only ones changing their tune about OCO. As OCO began to supplement more aid over the years, aid groups grew concerned that OCO might be targeted for cuts, since it sits outside the normal budget infrastructure. Many groups lobbied in late 2015 to get aid funds moved out of OCO and into the regular budget. To their relief, U.S. President Barack Obama cut OCO by 21 percent in his 2016 request — a widely praised move in the aid community.

But in the face of a Republican-dominated Congress and fewer proponents of foreign aid spending, aid groups are wondering whether OCO might’ve been a good failsafe, given the lack of other options in an aid-hostile Congress.

The House budget resolution increased OCO to $94 billion — the highest since 2013 — over the president’s proposed $58 billion. But where the president allocated about $7 billion to aid-related operations, the House left only $4 billion, the lowest level of State and Foreign Operations OCO spending in history if enacted.

“Now five and six years later, and we could have less money for critical humanitarian needs around the world than we did before the Arab Spring, and before the crises that have developed around Syria and Iraq,” Mark Lotwis, vice president of policy and government relations at InterAction, told Devex. “We just need more help to respond effectively.”

As Congress votes on amendments Friday and next week to increase OCO again, it will be decided whether those boosts will increase foreign aid.

“Someone will likely propose adjustments to the [state and foreign operations] levels next week,” Eltrich said, adding that while there will be ample time to adjust international funding, foreign aid “could go unnoticed.”

How will foreign aid fare in the 2016 U.S. fiscal budget bill? Share your views by leaving a comment below.

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About the author

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    Molly Anders

    Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.