The commitment of some Clinton Administration appointees to a more participatory approach to development has given significant space to some development professionals to design new initiatives and advance limited reforms. Sustainable 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 29REPORT ON U.S. POLICY 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 look. 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- The Administration's 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- restructuring efforts in Congress. 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. 30 30 NACIA REPORT ON THE AMERICASREPORT ON U.S. POLICY 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 VOL XXXI, No 2 SEPT/OCT 1997 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 31REPORT ON U.S. POLICY 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 commission established to investigate charges of past human rights abuse. 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. 32 NACIA REPORT ON THE AMERICAS NACLA REPORT ON THE AMERICAS 32REPORT ON U.S. POLICY MODENIZASYON PA KAPITA 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 region. 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, 1991. 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- zations. 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.
