Development Aid: Some Small Steps Forward

September 25, 2007

The commitment
of some Clinton
appointees to a
more participatory
approach to
development has
given significant
space to some
professionals to
design new
initiatives and
advance limited
development" is
"the catch phrase
of the Clinton Administration's devel
abroad. Like "put people first" at home
meaningless until measured against the
policy choices on foreign aid and lendin
on domestic issues, the Administration
substantial ground to conservatives on t
structure of foreign aid; and on the poli
perspectives behind its lending progr
agreements, the Administration simply di
its predecessors. However, the commit
Clinton Administration appointees to a
tory approach to development has gi'
space to some development profession
bureaucracy to design new initiatives an
ited reforms.
When Bill Clinton took office, Admi
cials launched an ambitious project
Lisa Haugaard is Legislative Coordinator of th Working Group, a coalition of 60 national hu gious, grassroots, policy and development or
views expressed in this article do not necessary
Working Group.
Women rolling cigars in a Guatemalan community development project.
opment policy Foreign Assistance Act of 1961, the landmark Cold War
-, the phrase is legislation that, amended over the years, has provided
daily record of the framework for all aid programs. Not-for-profit pri-
g programs. As vate voluntary agencies and anti-poverty advocacy orga-
has given up nizations were allowed input into the draft legislation,
he overarching which contained a laudable chapter on sustainable
tical-economic development. Yet, unfortunately, this legislation still
ams and trade grounded U.S. aid within narrow foreign policy objec-
ffers little from tives. While no one holds a copyright on the true path to
ment of some sustainable development, its advocates generally sup-
more participa- port participatory and community-based development
ven significant efforts that focus on small-scale farmers and entrepre-
tals within the neurs. Assistance reforms moving in a "sustainable"
d advance lim- direction would encourage self help, promote environ-
mentally friendly production techniques and include a
nistration offi- recognition of the importance of food security. Such a
to rewrite the development path would be more likely than the cur-
rently fashionable neoliberal path to promote equitable, ie Latin America broadly shared progress. man rights, reli- The reform effort, however, soon crumbled in the face ganizations. The
rily represent the of congressional resistance. With the mid-term congres-
sional elections of 1994, the attempt to rewrite the
Foreign Assistance Act was entirely abandoned. The
Administration's approach shifted from a proactive
attempt to reform aid into a defensive attempt to protect
aid programs from budget cuts and to fend off the worst
aid-restructuring efforts being pushed in Congress.
These efforts were led by Senator Jesse Helms (R-NC),
the powerful chair of the Senate Foreign Relations
Committee, who for years had characterized foreign aid
as "throwing money down foreign ratholes." Unlike
progressive critics of foreign aid who saw U.S. aid pro-
grams as too self-serving and too little tied to global
poverty reduction, Helms perceived U.S. aid as not self-
serving enough. With Republicans in control of
Congress and determined to reduce the deficit, Helms
waged a campaign to cut the foreign-aid budget.
Perhaps more damaging in the long term was his
attempt to restructure the bureaucracy by making the
U.S. Agency for International Development (AID)-the
primary U.S. agency delivering development aid-
dependent on the U.S. Department of State. After three
years of attempting to stave this off, the Administration
recently agreed to a State-AID merger that technically
preserves AID independence but in practice may ensure
greater State Department control over aid programs.
Merger critics worry that this move will give short-term
U.S. policy interests even greater sway over what
should be long-term development strategies.
As the Administration attempted to defend budgets
from even steeper cuts, it gave ground in its rhetorical
justifications for foreign aid. Early emphasis on sustain-
able development and the need to address global
poverty gave way to an emphasis on providing U.S. jobs
and promoting and building markets for U.S. exports.
The private voluntary organizations and advocacy
groups that had focused on aid reform also turned their
efforts to the defense of aid budgets, leaving little
energy for reform.
Meanwhile, the Clinton Administration's emphasis on
extending NAFTA and building a free trade area of the
Americas overshadowed any attempt to form a coherent
vision of sustainable development. The Summit of the
Americas, the centerpiece of Clinton's Latin America
policy, featured expansion of trade agreements as the
solution for hemispheric problems, downplaying serious
discussion of bilateral assistance and new strategies for
addressing poverty.
' while efforts at the structural level proved inef-
fective, however, certain U.S. bilateral aid
programs have improved under the Clinton
Administration. These improvements have been most
evident in the Administration's Central America pro-
grams which, for the most part, are under the authority
of U.S. AID. Since these programs had been the ideo-
logical showpieces of the
Reagan and Bush Admin-
istrations' aid policies, the
recent changes merit a close
During the 1980s and
early 1990s, Central Ame-
rica aid programs formed
an integral part of a politi-
cal and military strategy to
defeat Central American
leftist insurgencies, isolate
the Sandinista government
in Nicaragua, and promote
a free-market agenda. Aid
to the private sector and
non-governmental organi-
zations (NGOs) was aimed
at creating and strengthen-
ing conservative think
tanks, business associations
and other institutions wed-
ded to free-market philoso-
phies. AID played a much
more active role in struc-
approach shifted
from a proactive
attempt to
reform aid into a
defensive attempt
to protect aid
from budget cuts
and to fend off
the worst aid-
efforts in
tural adjustment here than in other parts of the world, both through its policy advisers placed in local min-
istries, and through the way it made assistance condi-
tional on certain market-oriented economic reforms.
Large cash transfers were used to repay debt, prop up
currencies and fund imports, while social programs
were tied to specific structural-adjustment requirements,
such as privatization, deficit reduction, restriction of
credit and layoffs of government personnel. For a given
grant of $10 or $20 million, for example, a country
would have to agree to lay off 10,000 employees in a
given amount of time.
In El Salvador, millions of dollars flowed into gov-
ernment coffers, which freed government resources to
fuel the war effort. Some $100 million was channeled to
the private sector to stimulate export promotion. Under
pressure from AID as well as multilateral financial insti-
tutions, even peaceful, social-democratic Costa Rica
was pushed to privatize financial institutions and other
state-owned enterprises, to cut government spending
and to reorient agricultural production towards an
export-led strategy. This resulted in the partial erosion of
the country's more equitable development policies.
Once the Sandinistas lost in Nicaragua, U.S. AID
designed its programs to bring the country back in line
with the rest of the region by strengthening non-
Sandinista organizations and returning power to the
large private-sector business organizations. While the
rest of its first-aid program was slow in coming, U.S.
AID rushed to replace Sandinista textbooks in the
school system, at a cost of $12.2 million. AID was up
front about its aim of undermining Sandinista-associ-
ated organizations. An initial grant of $700,000 to the
AFL-CIO's American Institute for Free Labor
Development (AIFLD) included plans to "recruit and
retain new members from the ranks of Sandinista
unions."' Sandinista-affiliated peasant leaders in the
National Union of Farmers and Ranchers (UNAG)
claim that AID mission director Janet Ballentine told
them that the agency aimed to "undermine their control
over the countryside." AID's rural development strategy
relied heavily on the Nicaraguan Union of Agricultural
Producers (UPANIC), the conservative farmers' associ-
International observers at a Nicaraguan polling place in 1990. In tha overtly funded the anti-Sandinista campaign of Violeta Chamorro.
ation, and excluded aid to cooperatives, which were
seen as Sandinista strongholds. U.S. AID microman-
aged the Nicaraguan economy through its conditionali-
ties tied to privatization, government layoffs and cut-
backs. Reagan and Bush Administration policy was so
polarized that all U.S. government employees in
Nicaragua had to abide by a "non-fraternization" code, under which they had to report each and every social or
job-related contact with anyone even vaguely associated
with the Sandinistas to embassy superiors.
Changes in the Clinton Administration's approaches
to Central America were set into motion by new AID
appointees who had been critics of its Central American
programs. The new AID Chief of Staff Dick McCall had
overseen and critiqued AID programs in El Salvador in
his previous post on the Senate Foreign Relations
Committee, while Latin America director Mark
Schneider had also expressed sensitivity to such con-
cerns. Within the first few months, this orientation
began to make itself felt. AID invited some of its most
persistent critics to dialogue. To kick off debate, for
example, Administration appointees asked the left-of-
center Development Group for Alternative Policies
(Development GAP) to arrange a Latin America round-
table discussion, and the new appointees invited Oxfam
America to bring Central American leaders of peasant
associations and development projects, along with
researchers from throughout the region who had pub-
lished studies criticizing U.S. AID, to meet with the
agency's Central America staff. 2
Personnel rotations in the AID Washington Office of
Central American Affairs and in the AID missions in
Central America, along with new orientations from
above, led to concrete program and
process changes. AID missions in
Nicaragua, El Salvador and Guatemala
paid greater attention to consulting with
local partners, and cast their net more
broadly to consult with and fund pro-
gressive as well as conservative NGOs
and individuals. Country strategy docu-
ments, which AID missions produce
every five years to analyze a country's
political and economic landscape and to
identify AID's strategic role, were writ-
ten, at least in El Salvador and
Nicaragua, with participation of local
nongovernmental leaders and re-
searchers as well as voluntary organiza-
tions from the United States. In the
Washington office, AID was not only
at year AID open to dialogue and meetings with
both U.S. and visiting Central
American non-governmental leaders,
but actively searched out such dialogue, asking NGOs to
convene meetings when mission directors were in town.
To what extent this more participatory outlook resulted
in program changes is more difficult to assess, although
some progress is certainly clear. In El Salvador and
Guatemala, AID placed greater emphasis on funding the
implementation of the Peace Accords, an emphasis made
easier by bipartisan acceptance in Congress. In El
Salvador, for example, this meant funding a program
which transferred land to 34,000 FMLN ex-combatants
and landless poor. 3 AID not only funded the program, but
made it self-sustaining by brokering an arrangement for
loan forgiveness to ensure that the new beneficiaries
would not soon lose their land. Vocational and academic
training as well as medical rehabilitation services were
offered to ex-combatants. AID's development programs
targeted the 115 municipalities most affected by the war.
As the period for the Accord's implementation winds
down, AID is proposing a primary focus on rural poverty
reduction in El Salvador. 4 Democracy programs will
focus on strengthening NGOs, thus strengthening
Salvadoran civil society so it can continue to press for
needed reforms in the justice system and other sectors.
In Guatemala, AID funds the UN mission set up to
verify the accords, MINUGUA, and will supply at least
$1 million to the Clarification Commission, the organi-
zation established to investigate cases of past human
rights abuses. U.S. assistance for demobilization camps
for ex-guerrilla combatants flowed with unusual speed,
and will continue to flow for reintegration programs,
including vocational training. Ongoing programs to pro-
mote justice reform, improve tax collection programs
and basic education fit in well with some of the specific
Peace Accord goals, thus development-aid programs
have been redirected to target those areas most affected
by the war. Recognizing that weak social organizations
will have a hard time taking full advantage of the open-
ings provided by the Peace Accords, AID is also fund-
ing a program for advocacy training that focuses on
Guatemala's "politically disenfranchised" sectors to
help them "participate actively in public decision-mak-
ing and ensuring government accountability." 5
In Nicaragua, old habits and alliances were the hard-
est to change, partly because of continued pressure from
Senator Helms and other conservative members of
Congress. But the mission did reach out to progressive
sectors whom the previous mission director had alien-
ated and excluded. AID now provides funding to
UNAG, for example, the very peasant organization
whose influence the previous mission director had
explicitly sought to undermine. The Cooperative
League of the USA (CLUSA) was brought in as a con-
tractor to work with cooperatives, including ones
formed under the Sandinistas-although AID is still
explicitly forbidden to fund any cooperative or organi-
zation using land confiscated from a current U.S. citizen
with a title that is still contested.
AID's program in Nicaragua is still heavily scruti-
nized by Senator Helms, Rep. Ben Gilman and other
Republican leaders, who upon occasion exercise veto
power over projects. When the mission's health expert
determined that the Ixchen women's movement, formed
by renegade Sandinistas who left the party because they
felt there was no space for women's issues, could offer
excellent rural outreach for family planning, Helms'
staff found out and nixed the project-charging that
Ixchen was not only carrying out abortions, but operat-
ing in a confiscated house.
A look at U.S. AID's election program in Nicaragua
shows both the improvements and the continued influ-
ence of conservative members of Congress over the
Nicaragua aid program. In 1990, the United States pro-
vided $8 million to Violeta Chamorro's campaign--
with nary a pretense of impartiality. AID's support for
the 1996 election was, in comparison, far more nonpar-
tisan, with $5 million devoted to electoral mechanics
and voter education through the Supreme Electoral
Council. AID staff provided well-grounded, nonpartisan
technical advice throughout the process, and worked
diligently to help Nicaraguan electoral authorities sur-
mount considerable logistical difficulties.
On the observation side, the aid program was more
distorted by politics. Substantial resources were spent
observing voter registration in former conflict zones,
since Republican staffers feared discrimination against
former members of the Contra resistance. AID also
funded U.S. organizations to
These included the centrist
Carter Center as well as the
conservative Republican
Institute (IRI). The IRI, in
turn, helped to establish
Etica y Transparencia (ET),
a Nicaraguan election moni-
toring group. Again, AID's
old alliances showed: ET's
board turned out to be pri-
marily allied with candidate
Arnoldo Alemdin's right-
wing Liberal Alliance, a
connection that grew to be
embarrassing when the chair
of the supposedly nonparti-
san board, Emilio Montalban,
was picked to be Aleminn's
foreign minister. The U.S.-
funded international and
domestic observation efforts
seemed to be designed pri-
marily to monitor fraud
from the Sandinista side. Yet
it was government disorga-
nization and occasional inci-
dents of fraud from Liberal
observe the elections.
In Guatemala,
AID funds the
UN mission set
up to verify the
Accords, and will
supply at least
$1 million to the
established to
charges of past
human rights
Alliance officials that turned out to be the more serious
problems. To its credit, AID attempted to correct ET's
bias by encouraging the organization to invite progres-
sive organizations to join. 6 In the end, ET may over-
come its partisan origins and provide domestic observa-
tion that would be preferable to continued dependence
on outside fixes.
Perhaps as important as what AID is funding is what
it has stopped funding. Without the large cash transfers,
AID in Central America no longer acts as an enforcer of
structural adjustment. Influence over adjustment is lim-
ited to a few policy advisers in each country in addition
to some assistance for implementing privatization.
Sitlyasyon an koulye a
An AID-funded ad in Haiti promoting "Modernization through Capi
tion" in which public enterprises are failing and people are lacking
is transformed by private investment into a situation in which new
ble, the state has more tax revenue, the people have services, and
While AID officials claim that there is simply not
enough money to continue enforcing structural-adjust-
ment programs, they appear to have decided that spe-
cific peace-implementation and poverty-reduction pro-
grams in Central America are a higher priority than
continuing aid tied to conditionality. Whether AID's
withdrawal from enforcing adjustment has any real
effect is debatable, given the International Monetary
Fund and World Bank's continuing influence--
although the change gives AID a different profile in the
AID's bilateral assistance program in Haiti, however,
remains the target of progressive critics like the
Development GAP and Grassroots International, which
charge that U.S. aid programs there are still tied to struc-
tural adjustment. 7 According to these critics, AID's Haiti
programs focus on agribusiness and U.S. investment
rather than peasant farming, and thereby undermine
food security. U.S. AID efforts to promote privatization
appear to be as heavy handed as the Central American
programs during the Bush Administration. 8 The agency
held up an allotment of aid until cement and flour mills
were sold, and it hired a public-relations firm to sell the
virtues of privatization to the Haitian public.
While AID's role as adjustment enforcer in Latin
America-with the exception of Haiti--has sharply
diminished, U.S. policy through the Treasury and
LLIZASYON the multilateral lending agencies has continued
to back free-market pre-
Stilyasyon an apre pwogram lan scriptions. These include
downsizing government
operations, privatizing a
wide variety of services
and industries, changing
national investment reg-
ulations to protect for-
eign investors, raising
revenues through user
fees and value-added
taxes and liberalizing
trade. While the Admin-
istration has joined with
nongovernmental critics
to push the multilaterals
to improve public access
to information and to put
in place some minimal
mechanisms for account-
ability, it has not chal-
talization." The "current situa- lenged the established
water electricity and telephones wisdom on structural ad- private companies are more sta- justment. Nowhere with- money is rolling into the country in AID, Treasury, State
or any other agency principally concerned with U.S.
assistance to developing nations does there appear to be
serious discussion about the ways in which economic
reform goals could possibly conflict with laudable goals
of poverty reduction and the support of small-scale
development pursued in bilateral aid programs.
All this is taking place against the backdrop of a dra-
matic decrease in assistance. Overall economic aid lev-
els to Latin America in 1997 are one-third their 1990
levels. No other part of the world faced U.S. aid cuts on
so large a scale at the end of the Cold War. These dras-
tic cuts, however, may turn out to be a blessing in dis-
guise. Smaller-scale programs that are less in the politi-
cal limelight may actually offer greater space for
innovation. 9 Such serious innovation, however, has not
yet materialized.
Within these strong limitations, the Clinton
Administration's bilateral aid programs, at least in
Central America, are more participatory, less polarizing
and more focused on small-scale development than in
the past. 1 0 Where there are sympathetic political
appointees and development professionals, advocates
working to improve U.S. development policy should
take advantage of opportunities to dialogue and offer
concrete proposals for changes to programs and poli-
cies. "No more postcard campaigns, please," asked one
AID official. "Come and talk to us instead."
Development Aid
1. General Accounting Office, "Aid to Nicaragua: Status of U.S.
Assistance to the Democratically Elected Government," May 1,
2. Laura Renshaw, "The Reform of U.S. AID: A Central American
Perspective," Oxfam America, Summary of Meetings,
Washington, D.C. May 3-4, 1993.
3. U.S. AID El Salvador, "Results Review, Resources Request FY
1999," March 10, 1997, p. 3.
4. U.S. AID El Salvador Mission, "Rural Poverty Reduction as a
Strategic Focus: The Case of U.S. AID El Salvador," LAC Bureau
Mission Directors Conference, Antigua, Guatemala, February 13-
15, 1997.
5. U.S. AID, G-CAP, "Request for Applications (RFA) Guatemala 520-
97-A-015, Strengthening Civil Society," May 23, 1997, p. 5.
6. Former First Foreign Minister of the Sandinista government,
Alejandro Bendana, now leading a reconciliation project for
excombatants from both sides, joined the board, and the pro-
gressive Protestant development agency CEPAD and the human
rights organization CENIDH provided some of ET's volunteers.
7.Tom Carter, "Inadequacies in U.S. Aid Programs are no Mysteries
to Poor Haitians," The Washington Times, May 7, 1997, p. All.
8. Lisa A. McGowan, "Democracy Undermined, Economic Justice
Denied: Structural Adjustment and the AID Jugernaut in Haiti,"
The Development GAP, January, 1997.
9. One inexplicable development is the Administration's failure to
defend a bilateral aid program that has always been viewed as
an outstanding example of grassroots development assistance,
the independent Inter-American Foundation (IAF). Despite being
saddled with conservative board appointments from the Reagan
Administration, the IAF has remained true to its mission of fund-
ing small-scale grassroots development with a minimum of red
tape. The IAF has survived the threat of losing its independent
status, but is losing its niche as the funder of grassroots organi-
10. Other ongoing questions about AID's effectiveness touch on basic
dilemmas about bureaucracy. Some voluntary organizations
complain that AID's participation in Vice President Gore's
"Reinventing Government" initiative, which has resulted in a
renewed emphasis on working toward and measuring specific
results, is having unintended side effects. Focused on producing
quantifiable results, some AID managers are turning more to con-
tracts rather than cooperative agreements. Onerous reporting
requirements are easiest for the large for-profit contractors
known as "the beltway bandits," difficult for many private volun-
tary organizations and impossible for small NGOs.

Tags: US foreign policy, Bill Clinton, development, USAID, bilateral assistance

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