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The Midterm Elections’ Impact on U.S. Development Policy

By now it is old news- in the 112th Congress, the House will turn from a Democratic to a Republican majority.  Committee leadership and composition will change, with implications for U.S. policy in many areas. 

What will this change in leadership mean for development?  There are two committees where the change will matter most for U.S. development and foreign aid policy- the House Foreign Affairs Committee (HFAC), and the House Appropriations Subcommittee on State and Foreign Operations.  Congressman Berman will now be the ranking member (or minority leader) of HFAC, and Congresswoman Ileana Ros-Lehtinen will step up to be the committee chair.  As chair of HFAC, Congressman Berman introduced legislation on foreign aid reform, HR 2139, and began to rewrite the Foreign Assistance Act of 1961.  As ranking member of the committee, he could still rewrite this bill and introduce it in the House, but it would be up to the new chair to allow it to come to a vote in HFAC.

In Foreign Policy’s blog The Cable, Josh Rogin provides a profile of the new chairwoman, stating that, “[s]he isn’t likely to move Berman’s foreign-aid reform bill through the committee and she is likely to seek cuts in the foreign-aid budget in her authorization bill.”  Josh Rogin also reports in The Cable that Texas Congresswoman Kay Granger is seeking to chair the Foreign-Ops Subcommittee, and he notes that while she supported this year’s foreign-ops appropriation bill, she criticized the budget increase given our domestic economic concerns.

Other blogs are somewhat more cautiously optimistic about the future of development policy and foreign aid reform, such as the Center for Global Development: Views from the Center.  In this blog, Sarah Jane Staats writes that some good could come out of forcing the administration to work more closely with Congress, though funding will be tight.  She also wisely points out that development is not all about money, and the administration might find other ways to work with Congress on development issues, such as through making U.S. trade policy more effective for development.  President Obama could reach out to newly-elected Senator Rob Portman (R-OH), former U.S. Trade Representative under the Bush administration, on this issue.  (Greater policy coherence between trade and development also happens to be one of Global Washington’s policy recommendations on global development, so we would be interested in seeing this happen.)

And MFAN (the modernizing foreign assistance network) writes that the newly elected members of Congress can find common ground in reforming foreign aid, which is largely considered a bipartisan issue.  We need to continue to remind the new House majority party of this fact.  All it should take is a glance across the Capitol, where Senators Kerry and Lugar, the Democratic and Republican leaders of the Senate Foreign Relations Committee, have worked together on foreign aid reform through S 1524,  the Foreign Assistance Revitalization and Accountability Act of 2009.

Global Washington’s Seminar on Fair Trade: Promising Future, Unmet Potential

By Brian Pierce, guest blogger

Last week Global Washington co-sponsored a seminar on fair trade, along with the organizations Fair Trade Seattle, iLEAP, and Antioch University Seattle Center for Creative Change. Fair trade is undoubtedly a critical subject in global development, however the meeting was not an echo chamber of fair trade romanticism. Thoughtful critique by on-site participants of fair trade programs in Central America broke ground for meaningful discussion to sprout. While speakers naturally covered the “who’s who and what’s what” of fair trade, there was a significant degree of reflection and self-criticism. This kind of scrutiny is exactly what the fair trade movement needs when facing a force as domineering as world trade policy. Before fair trade can take on the world it must first address concerns like those raised by the on-site activists.

To begin with, what is fair trade? Stacie Ford Bonnelle, a presenter from Fair Trade Seattle and 10,000 Villages, described how fair trade can be defined in numerous ways: as a social justice movement, a tool for international development, or simply an alternative business model. FINE, an informal network of four Fair Trade Organizations (FTOs), provides the most widely accepted definition:

“A trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. Fair Trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising, and in campaigning for changes in the rules and practice of conventional international trade.”              

So, the goals of fair trade are to empower marginalized people and improve their quality of life. These goals in their full flesh would certainly lead to a more equitable and prosperous world. There are problems, though. For instance, how does the socially conscious consumer know if they are truly purchasing fair trade items?

Identifying fair trade products can be tricky. There are numerous Fair Trade Labeling Organizations and FTOs pushing varying criteria including: Fair Trade Federation, Fair Trade USA, Fair for Life, World Fair Trade Organization, Equal Exchange, Global Exchange, and others. These organizations share common principals, but it is not unknown for an up-and-comer to promote their “better-than” fair trade goods. A consumer is liable to become helplessly entangled in the web of organizations.  Ms. Bonnelle argued that this system needs standardization, stating that “we need to make sure we have a standard and people know what these standards are.” Decentralization was not the only problem brought up by the panel.

Madeline Mendoza, an iLEAP Fellow and the Program Coordinator for Economic Justice at the Center for International Studies in Nicaragua spoke about how, while fair trade was improving the lives of the coffee producers she works with, changes are necessary. The global South continues to be trapped supplying the North with raw materials and are at risk of reinforcing an unhealthy agriculture export model of trade. This means that many developing countries continue focusing on cash crops like coffee and are then forced to import necessities like rice. Mendoza argued that fair trade is indistinguishable from its traditional market economy counterpart in this respect. Fair trade could be a perfect medium to address this disparity, but has thus far failed to do so.

From this inequality arises a clear point of contention from fair trade participants concerning the ownership of the system. Fair trade is meant to be an empowerment to individuals in developing countries, yet developed countries are the ones dictating the criteria for certification. The movement suffers from a lack of democracy in decision making; farmers feel as if they have none of the voice and the entire burden. As well, the great majority of goods currently affected by fair trade are agricultural cash crops. Mendoza argues that there needs to be a greater focus on local markets and diversification of products in her native Nicaragua, what she calls “food sovereignty.”

The notion that a huge burden of requirements is thrust upon fair trade growers was parroted by Mendoza’s counterpart, Agueda Ordeñana. Ordeñana, an iLEAP Fellow and member of the New Land Cooperative Union in Nicaragua described how certification expenses have fair trade participants questioning their decision. The cost of the yearly certification is about “one container of coffee out of twenty,” a cost that is almost wholly absorbed by the growers. To make matters worse, the fair trade price of coffee has remained stagnant even as conventionally traded coffee prices continue to rise. Ordeñana went on to say that if fair trade growers are to continue participating “we need results.”    

The goals of fair trade are vitally important. This enlightened system of trade has unquestionably provided a stable market and a means for growers from developing countries to dig up a piece of autonomy. However, the fair trade system appears to need review; open discussions like this can help bring about the changes needed for fair trade to meet its potential to truly empower the poor.

Compare aid efforts worldwide with the new QUODA assessment tool

Those interested in aid reform may enjoy trying out QUODA, an assessment tool which tracks, compares, and ranks the quality of aid based on data provided by 31 donor countries and 152 aid agencies. QUODA was co-created by Nancy Birdsall, president of the Center for Global Development, and Homi Kharas, deputy director of the Brookings Institution’s Global Economy and Development program. They hope the tool will be a catalyst for dialogue, and help drive the movement to results based aid.

How It Works

The tool ranks quality using 30 indicators grouped into four aspects or “dimensions” of aid, which were identified through a consensus of actors including academics, donors, civil society organizations and INGOs. They are: 

Maximizing Efficiency – This gauge attempts to evaluate poverty alleviation efforts, against a global standard of how to best accomplish sustainable growth, and rewards donors for allocating more aid to poorer countries and better governed countries.

            Highest Ranked: Agency – Finnish Government, Country – GFATM

Fostering Institutions – refers to how well countries and agencies perform in terms of supporting local ownership and engagement in the aid process, fostering local institutions, and sustainable solutions in recipient countries.

            Highest Ranked: Agency – Japan Bank for International Cooperation, Country – Ireland 

Reducing Burden – this dimension ranks donors higher, who “decrease fragmentation, increase project size, contribute to multilaterals, coordinate their missions and analytical work, and use higher shares of program-based aid”.

Highest Ranked: Agency – New Zealand International Aid and Development Agency, Country – IFAD 

Transparency and Learning – reflects donor’s commitment to collecting, reporting and sharing program data with other donors and recipient countries, the frequency of sharing, and the degree to which donors support counties with good M&E frameworks, so they can track their own progress.

            Highest Ranked: Agency – Norway, Office of the Auditor General, Country – Australia

Where does the U.S. stand in ranking?

QUODA’s Quality of Aid Diamond tool enables users to quickly compare countries and agencies across all four dimensions.  The figure to the left demonstrates that the U.S. rates below the mean in all four dimensions, when compared to all other countries.

            Maximizing Efficiency: – 0.41 

            Reducing Burdon: – 0.64

            Fostering Institutions: – 0.87 

            Transparency: – 0.34

According to a recent Global Prosperity Wonkcast, the US ranked second to last in fostering institutions. This may be due, according to the authors, to a reliance on contracts (which may do a good job), but may be less likely to contribute to local ownership of projects.

QUODA offers thought provoking results.  At the same time, the tool is based on a specific set of standardized indicators with their own bias.  For example, one of the indicators used in the reducing burden dimension is median project size, and appears to reward larger size, standardized projects.  In the Global Prosperity Wonkcast, the tool co-creators point out there are approximately 80,000 new aid projects a year, and the medium size of an aid project is $70,000. While not all aid projects have to be huge, they indicate a need to have the ability to scale up a project.

One might argue that local projects in the poorest countries more often than not start out small, and may be successful in large part because they are a manageable size and less hampered by the bureaucracy often associated with large projects. There needs to be a balance between the efficiencies gained in standardization, and an appreciation for appropriate small scale projects, responsive to local conditions and resources.  

To their credit, Nancy Birdsall and Homi Kharas solicit suggestions and feedback on the QUODA web site.  They want to help make sure your aid dollars go into environments where they can have an impact, and where countries are determined and dedicated to promote their own development, so we are reasonably sure of success.

QUODA

Global Prosperity Wonkcast 

Good Aid? Bad Aid? QuODA Tracks How Donors Stack Up. Interview with Nancy Birdsall and Homi Kharas